Apple buys chip designer P.A. Semi for $278 million

Apple is suddently entering the low power consumption CPU market by acquiring P.A. Semi for $278 million, a report indicates.

P.A. semi is a company which mainly makes low-power chips based on IBM's Power architecture that could fit into advanced mobile devices such as the iPhone.

The Forbes report, which reveals this acquisition, clearly states the decision by Apple to buy P.A. Semi in centered around the iPhone's strategy:

The decision to center the iPhone design around a chip that Apple could own marks a significant strategic choice by Apple Chief Executive Steve Jobs, and is aimed at ensuring Apple can continue to differentiate its flagship phone as a raft of competitors flood the market. According to a source affiliated with the chip company, Jobs and Senior Vice President Tony Fadell led the tiny group of executives who spearheaded the acquisition, which included negotiations that took place in Jobs' home. Forbes reports.

Apple has been rumoured to be preparing to use Intel's low-power chips in future iPhone generations but it appears that it won't be the case.

The two companies have been in touch some years ago, before Apple decided to switch to Intel for its Mac products. P.A. Semi could have been one of the PowerPC-based chip provider for Apple (in addition to IBM and Motorola), in case it didn't abandon the PowerPC architecture.

Apple is known for its immense unused cash availability of over $18 billion. When asked on how the company will use this cash during financial results conferences, Apple's Chief Financial Officer, Peter Openheimer often answered this money could be used in acquisitions.