Apple to Design own Chipset, Reduce Costs

Apple has made a move towards constructing its own line of chips by acquiring the services of several IBM and Nintendo designers. It's believed the move is meant to help the company save money in the future.

Ask any number of people to name the makers of the Mac, iPhone or iPod and expect almost everyone to say "Apple". However, the truth is that there are many other additional companies needed to manufacture such small, yet complex devices, and so simply answering "Apple" does not tell the whole story.

When Apple purchased chipmaker P.A. Semi back in April 2008, many viewed the acquisition as a sign that Apple was attempting to become a little less reliant on some of their supporting companies (or at least in the processor department).

Producing their own line of chips, for example, would alleviate tremendous costs. After all, one of the biggest selling points of P.A. Semi processors was their low-power consumption.

Now, one year following the acquisition of P.A. Semi, Apple has indeed announced plans to design their own line of chips to be featured in future products. Apple has also acquired the services of leading designers from IBM and Nintendo to help with the debut line of their chips. (Source: usatoday.com)

Less Money to Supporting Companies = More Money for Apple

Apple has good reason to pursue their own chip designs.

Take the iPhone: the device costs about $174 to make, but when you consider the bulk of that money is spent on components supplied by supporting companies, the desire to reduce these added expenses (and thus, pocket the rest of the money) becomes a huge incentive.

Since P.A. Semi specialized in low-power processors, many expect that the Apple chips will be designed with a focus on power conservation and extended battery life in their products. (Source: softsailor.com)

Future of Current Chip Suppliers Unknown

Not everyone is pleased with the Apple announcement, however.

TriQuint Semiconductor and Infineon Technologies are reliant upon Apple products to feature their processors. If Apple decides to no longer purchase their goods, the future could look very bleak for these supporting companies.

Analysts believe that the Apple chips will not be designed to compete against industry giants like Intel and Advanced Micro Devices (AMD). Instead, Apple will likely design their chips to suit their own needs and later outsource them to one of their "manufacturers-for-hire" in Taiwan, like TSMC or UMC.