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Tech Check
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The Wall Street Journal is out with a story tonight purporting to show a 'major shift' in Apple's strategy by jumping into the chip design business.
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Trouble is, and for what it's worth, I'm not sure this news represents the "major shift" the WSJ seems to suggest. You'll remember that last year Apple [AAPL
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] acquired PA Semi in a deal that raised many eyebrows because it put Apple squarely into the chip business. That was last Spring!
In interviews both with me and the Journal, Steve Jobs has said that Apple's iPhone and iPod Touch were so vastly ahead of the rest of the industry, that conventional, off-the-shelf microprocessors simply weren't fitting Apple's needs. And rather than contract out custom chips, the company felt it would be more cost-effective to design and build their own. That was the reason for the PA Semi purchase.
And let's not forget Apple's controversial hire of ASIC chip guru Mark Papermaster from IBM [IBM
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] last year. IBM threatened legal action to prevent him from going there, Apple was prepared to fight back, the two ultimately agreed to stand down, and the IBM chip expert reportedly started officially at Apple last Friday. But remember, his hiring made news through last year. It's clear that Apple's "chip strategy" has been evolving for much of the past year.
Flash forward to now: Since the purchase, Apple has been filling in the pieces of its chip puzzle to assemble a standalone team of designers. The WSJ lists several big names in its coverage tonight and that's interesting to say the least.
All of this could be bad news for ARM Holdings, and Samsung, both of which Apple has used in the past for its products.
It is unlikely however that Apple would build custom chips for other competitors, so PA Semi will likely not become a new revenue stream. But such a big team of designers could dramatically reduce the cost of chip development now that it's an in-house operation at Apple, which would keep costs of new devices lower while potentially increasing margins on them, and margins are a big deal in the wireless world.
Apple Bytes on CNBC.com
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So, the major shift, such that it was, to chip design by Apple, occurred a year ago. This, to me, merely furthers the company's already stated strategy.
The bigger story to me, buried here as it was in the WSJ piece: the level of hiring going on in Cupertino.
Sure, reductions in its contract retail staff grab big headlines. Likewise for the handful of sales positions the company cut recently. But to discover that Apple is on a hiring binge and ready to spend big bucks in dozens, or more than a hundred, highly compensated chip designers -- even as almost every other tech company is laying people off -- and it warrants an also-ran mention in the body of a story.
Which is what I just did! Damn!
Questions? Comments?
Data is a real-time snapshot *Data is delayed at least 15 minutes