Apple Inc. has agreed to buy P.A. Semi Inc. in Santa Clara, Calif., a microprocessor design company known for its high-end, low-power chips, according to media reports.
The alleged acquisition is worth approximately $278 million, Forbes said, citing a person familiar with the deal. P.A. Semi designs energy efficient processors based on the Power architecture which Apple used in its Macintosh computers for many years before adopting Intel's x86 chips.
It's a surprising move from Apple as it rarely acquires outside companies and considering the company's close relationship with Intel. Industry speculators suggest the takeover could have been spurred by problems Intel has been having with its new Atom processors which was supposed to be used in its next-generation iPhone and iPod devices
Apple is in the business of thinking up new devices that you can put an Apple operating system in and this gives them the processor they can stick in those devices without letting the whole world know about what they're designing, said Ezra Gottheil, an analyst at Technology Business Research Inc.
Apple and P.A. Semi did not confirm any details on the deal, although an announcement may be made as part of Apple's quarterly conference call later this afternoon. The company's shares were up $2.56 to $162.76 ahead of the closing bell.
PA Semi currently licenses the Power instruction set from IBM, so its chips are software compatible with the PowerPC chips Apple used. The company has 150 employees and includes engineers who have worked for Intel Corp., Advanced Micro Devices Inc. and Sun Microsystems Inc.
Santa Clara, Calif.-based P.A. Semi was founded in 2003 by Dan Dobberpuhl a lead designer for the Alpha and StrongARM processors.
Apple's largest deals in recent years a $66 million purchase of PowerSchool, a Web-based student information service, in 2001, and its $30 million purchase of Emagic, a music-production software company, in 2002.