Background – The inner workings of the first and second generation iPhones are largely based on off-the-shelf parts from third-party suppliers, but we are feeling the wind of change. Several puzzle pieces have fallen into place and begin to reveal the bigger picture behind Apple's $278 million acquisition of P.A. Semi. Apple is believed to be in a deal with Imagination, ARM and Samsung to enable the design of a custom chip for future mobile devices. Everything is shaping up to a scenario in which Apple will design its own system-on-chip (SoC) devices, based on ARM blueprints and PowerVR SGX graphics cores, while Samsung will manufacture the chips. The SoC could translate into a more capable engine driving the handset, shader-based 3D graphics for mobile games and HD video decoding for improved multimedia capabilities.
P.A. Semi background
P.A. Semi started as a small fabless semiconductor company in 2005. We at TG Daily had doubts whether the company could survive in a cut-throat market dominated by Intel, AMD and IBM on its own, but P.A. Semi was able to challenge the trio on power efficiency: Its 2 GHz dual-core processor consumed 4-5 times less power than other designs in its class at the time. Apple acquired P.A. Semi in April for $278 million and the company is believed to have been an investor in P.A. Semi prior to the acquisition. When it absorbed P.A. Semi, it was generally assumed that Apple wanted access to P.A. Semi's power savvy processors, similar in architecture to IBM and Motorola chips, for use in Mac laptops and desktops.
Interestingly, most media reports concluded that Apple wanted P.A. Semi's chips for future iPhones – which made little sense as those chips were too large and consumed up to 20 watts, far too much for handsets. Apple later said it bought P.A. Semi for its engineering talent and Jobs publicly ended speculations when he said P.A. Semi engineers will develop custom chips for future iPods and iPhones. "PA Semi is going to do system-on-chips (SoC) for iPhones and iPods," Jobs stated.
ARM background
Current iPhones sport a common ARM-based design licensed from UK-based ARM Holdings plc. More than 500 companies use various ARM designs, including most MID vendors. Apple, Acorn and VLSI Technologies jointly developed the first ARM processor in 1990. Apple first used ARM chips in its Newton PDA and later expanded its use to the iPod, iPod touch, iPhone and the AirPort wireless base station. Analysts believe Apple outsources manufacturing of tweaked ARM and SoCs used in current iPods and iPhone to Samsung.
The New York Times believes that the former P.A. Semi staff is now developing a custom mobile processor based on standard ARM cores for future iPhones. A leaked LinkedIn profile belonging to Wei-han Lien, ex-P.A. Semi engineer and now Apple's chip team member, supports the theory. ARM's Q2 earnings report also mentioned "a leading handset OEM who bought a long-term architecture license to ARM's current and future technology for use in mobile computing," which also points to Apple.
PowerVR background
Apple most likely cut another deal with Imagination, the maker of PowerVR MBX graphics cores used in current iPhone, Nokia N95 and most other MIDs. Two weeks ago, Imagination told press that an "international electronics systems company" secured a "multi-year, multi-use license" to current MBX and future SGX/VXD graphics and video IP cores expected to be used in a "number of new SoCs in this company's future products". Once again, this is a strong hint to Apple, since the company already has a limited license agreement with Imagination. Imagination said that SoCs will be "produced for this new partner by Imagination’s existing semiconductor partners and/or new chip manufacturing partners," pointing to Samsung, which has licensing deal with Imagination to use MBX cores in custom SoC designs.
A new, extended license would give Apple broad, exclusive access to the next-generation PowerVR SGX/VXD cores. The SGX core provides OpenGL ES 2.0 functionality and the Universal Scalable Shader Engine for hardware-accelerated, shader-based 3D graphics. The VXD core plays HD video with a power consumption comparable to the existing audio playback chips. Samsung has a manufacturing-only deal for SGX/VXD, but only Apple has exclusive intellectual property rights that enable the company to do tweaks and incorporate the technology into SoCs. This strongly indicates Apple will use SGX/VXD for graphics in its SoC design.
The pieces fall into place
It seems that Apple has created a strategy to design a custom SoC that will incorporate processor, graphics, memory and interfacing components aimed at future iPods, iPhones, a rumored Mac tablet and possibly other devices. The processor and graphics will be based on ARM and PowerVR SGX/VXD cores. Since neither Apple nor P.A. Semi own a fabrication facility, Apple is likely to just do the design and outsource manufacturing. It is highly unlikely that Apple will pour a few billion dollars in its own silicon factory – even Apple’s unit sales would not justify such an expense. Samsung is the most likely manufacturing partner. Texas Instruments, however, an early investor in PA Semi and its rumored components manufacturer, is also option.
Industry watchers believe this strategy will give Apple a technological edge over its rivals and may reduce its reliance on third-party chip designs. Custom-made SoC with unique features would make Apple's future gadgets harder to copy while such chips would also create a differentiator from competing products. It will be interesting to see how this strategy will affect Apple's relationship with Intel, which has gone to great lengths to provide “special” chips to Apple.
At least Apple’s view is clear in this matter: Steve Jobs told the Wall Street Journal that the P.A. Semi acquisition does not collide with Intel. "We have a great partnership with Intel," Jobs said. "We expect that to continue forever." He also said the move does not mark a new processor switch in Mac desktops and laptops. "I wouldn't lose too much sleep over that," Jobs said. "We're very happy with Intel."
P.A. Semi background
P.A. Semi started as a small fabless semiconductor company in 2005. We at TG Daily had doubts whether the company could survive in a cut-throat market dominated by Intel, AMD and IBM on its own, but P.A. Semi was able to challenge the trio on power efficiency: Its 2 GHz dual-core processor consumed 4-5 times less power than other designs in its class at the time. Apple acquired P.A. Semi in April for $278 million and the company is believed to have been an investor in P.A. Semi prior to the acquisition. When it absorbed P.A. Semi, it was generally assumed that Apple wanted access to P.A. Semi's power savvy processors, similar in architecture to IBM and Motorola chips, for use in Mac laptops and desktops.
Interestingly, most media reports concluded that Apple wanted P.A. Semi's chips for future iPhones – which made little sense as those chips were too large and consumed up to 20 watts, far too much for handsets. Apple later said it bought P.A. Semi for its engineering talent and Jobs publicly ended speculations when he said P.A. Semi engineers will develop custom chips for future iPods and iPhones. "PA Semi is going to do system-on-chips (SoC) for iPhones and iPods," Jobs stated.
ARM background
Current iPhones sport a common ARM-based design licensed from UK-based ARM Holdings plc. More than 500 companies use various ARM designs, including most MID vendors. Apple, Acorn and VLSI Technologies jointly developed the first ARM processor in 1990. Apple first used ARM chips in its Newton PDA and later expanded its use to the iPod, iPod touch, iPhone and the AirPort wireless base station. Analysts believe Apple outsources manufacturing of tweaked ARM and SoCs used in current iPods and iPhone to Samsung.
The New York Times believes that the former P.A. Semi staff is now developing a custom mobile processor based on standard ARM cores for future iPhones. A leaked LinkedIn profile belonging to Wei-han Lien, ex-P.A. Semi engineer and now Apple's chip team member, supports the theory. ARM's Q2 earnings report also mentioned "a leading handset OEM who bought a long-term architecture license to ARM's current and future technology for use in mobile computing," which also points to Apple.
PowerVR background
Apple most likely cut another deal with Imagination, the maker of PowerVR MBX graphics cores used in current iPhone, Nokia N95 and most other MIDs. Two weeks ago, Imagination told press that an "international electronics systems company" secured a "multi-year, multi-use license" to current MBX and future SGX/VXD graphics and video IP cores expected to be used in a "number of new SoCs in this company's future products". Once again, this is a strong hint to Apple, since the company already has a limited license agreement with Imagination. Imagination said that SoCs will be "produced for this new partner by Imagination’s existing semiconductor partners and/or new chip manufacturing partners," pointing to Samsung, which has licensing deal with Imagination to use MBX cores in custom SoC designs.
A new, extended license would give Apple broad, exclusive access to the next-generation PowerVR SGX/VXD cores. The SGX core provides OpenGL ES 2.0 functionality and the Universal Scalable Shader Engine for hardware-accelerated, shader-based 3D graphics. The VXD core plays HD video with a power consumption comparable to the existing audio playback chips. Samsung has a manufacturing-only deal for SGX/VXD, but only Apple has exclusive intellectual property rights that enable the company to do tweaks and incorporate the technology into SoCs. This strongly indicates Apple will use SGX/VXD for graphics in its SoC design.
The pieces fall into place
It seems that Apple has created a strategy to design a custom SoC that will incorporate processor, graphics, memory and interfacing components aimed at future iPods, iPhones, a rumored Mac tablet and possibly other devices. The processor and graphics will be based on ARM and PowerVR SGX/VXD cores. Since neither Apple nor P.A. Semi own a fabrication facility, Apple is likely to just do the design and outsource manufacturing. It is highly unlikely that Apple will pour a few billion dollars in its own silicon factory – even Apple’s unit sales would not justify such an expense. Samsung is the most likely manufacturing partner. Texas Instruments, however, an early investor in PA Semi and its rumored components manufacturer, is also option.
Industry watchers believe this strategy will give Apple a technological edge over its rivals and may reduce its reliance on third-party chip designs. Custom-made SoC with unique features would make Apple's future gadgets harder to copy while such chips would also create a differentiator from competing products. It will be interesting to see how this strategy will affect Apple's relationship with Intel, which has gone to great lengths to provide “special” chips to Apple.
At least Apple’s view is clear in this matter: Steve Jobs told the Wall Street Journal that the P.A. Semi acquisition does not collide with Intel. "We have a great partnership with Intel," Jobs said. "We expect that to continue forever." He also said the move does not mark a new processor switch in Mac desktops and laptops. "I wouldn't lose too much sleep over that," Jobs said. "We're very happy with Intel."