Apple signs processor supply agreement with Freescale

In a SEC (Security and Exchange Commission) Form published on August the 26th Apple announced that it had signed an agreement with its PowerPC G4 chips supplier, Freescale (former Motorola chips (division). The terms of the agreement are more flexible for Apple than for Motorola though.

The agreement indicates that Motorola will have to supply PowerPC G4 chips to Apple until the end of 2008. However Apple will be able to stop purchasing processors from Freescale progressively by ending the production of a product and replacing it with another. This agreement allows Apple to stop producing Macs based on the PowerPC and replace them with Macs based on the Intel architecture before or by the end of 2008.

Here is what the SEC form states :

Under the terms of the agreement, subject to certain conditions, Freescale is obligated to supply its microprocessors for orders placed by Apple through December 31, 2008. Apple is under no obligation to purchase Freescale microprocessors other than work in progress that was in place at the time the agreement was executed.

As you see Apple now has options to make a smooth transition to the Intel processors (until 2009?) although the company announced it would finnish the transition the end of 2007 or early 2008. However, this agreement was probably signed by Apple and Freescale so as to make sure there will be a supplier for Apple in case the company faces issues during the transition to the Intel architecture. It is also possible that Apple wants to produce both Intel and PowerPC versions of some of its product lines until the end of 2008.