Apple Buys Intrinsity, a Maker of Fast Chips

Apple Buys Intrinsity, a Maker of Fast Chips
By ASHLEE VANCE and BRAD STONE
Copyright by The New York Times
Published: April 27, 2010
http://www.nytimes.com/2010/04/28/technology/28apple.html?th&emc=th


Apple wants the fastest chip for its mobile devices and has bought another chip maker to gain an edge over its competitors.

Apple has acquired a small Austin, Tex., company called Intrinsity, known for making zippy versions of a computer chip often found in mobile devices. The deal, which closed late last month and was confirmed by Apple on Tuesday, shows the company continuing to try to gain an edge in the mobile device market by purchasing technology and chip experts.

It is the second time in two years that Apple has purchased a small chip company to gain critical technology for making a faster processor that uses less energy.

“This adds another arrow to their quiver,” said Tom R. Halfhill, a well-known chip analyst for Microprocessor Report. Mr. Halfhill said his industry contacts put Apple’s acquisition price for Intrinsity at $121 million. Steve Dowling, an Apple spokesman, declined to comment on that figure.

“The purchase price is like pocket change to Apple, and they get a lot of benefit,” said Mr. Halfhill. Apple’s products should handle tough jobs like playing video better than competing gear while devouring less battery life, analysts said.

Ever since Steven P. Jobs, Apple’s chief executive, unveiled the iPad in February, analysts in the technology industry have been obsessed with its innards. Chip analysts, in particular, zeroed in on the A4 chip that Apple credited with giving the iPad better battery life and more speed than similar devices.

The widespread speculation has been that the A4 chip relied on technology from Intrinsity to get its added processing power.

The speed of mobile device chips are typically measured in megahertz, and one of the more popular chips on the market usually runs at about 650 megahertz. Intrinsity’s engineers found a way to crank that speed up to 1000 megahertz, which happens to be the same speed as the A4 in the iPad.

Intrinsity has been working with a division of Samsung that manufactures chips on this speedy product. The same division of Samsung built the A4 chip for Apple, according to Chipworks, a firm that reverse-engineers and analyzes technology products.

By acquiring Intrinsity, Apple would be able to keep that 350 megahertz edge to itself.

Word of the acquisition began to leak out after technology trade publications noticed earlier this month that a number of Intrinsity employees had started to list Apple as their employer on the social networking Web site LinkedIn. Neither company, however, would discuss their relationship.

The people familiar with Apple’s situation say that efforts to create a new chip for mobile devices from the ground up are stalling. In 2008, Apple purchased another chip maker, called PA Semi, for $278 million. That start-up also specialized in making fast, low-power chips.

But a number of the PA Semi employees have left Apple — many of them disgruntled about their compensation, according to people with knowledge of the situation who were not authorized to speak publicly. Google, in fact, bought a start-up called Agnilux earlier this month filled with PA Semi engineers.

The Intrinsity purchase was seen as a way to help Apple maintain a lead over other device makers while it deals with these issues.

Mr. Halfhill said Apple appeared to be building its own version of the ARM chip favored by makers of mobile devices. Other chip companies like Nvidia, Qualcomm and Marvell have made their own versions of ARM, in some cases spending hundreds of millions of dollars in the process.

Apple’s strategy of creating a custom chip for mobile devices runs counter to its approach in computers in which it purchases chips from Intel.