Apple buying microchip designer P.A. Semi

By Scott Hillis

SAN FRANCISCO (Reuters) - Apple Inc (AAPL.O: Quote, Profile, Research, Stock Buzz) is buying P.A. Semi, a designer of low-power microchips, in a move that could bolster its ability to customize key parts for its iPhone, iPod and Macintosh product lines.

The deal, first reported on the Forbes magazine Web site, was confirmed on Wednesday by Apple spokesman Steve Dowling, who declined to comment on financial terms or give details.

"Apple buys smaller technology companies from time to time, and we generally don't comment on their purpose or plans," Dowling said.

Forbes said the transaction was valued at $278 million in cash. Officials at Santa Clara, California-based P.A. Semi were not immediately available to comment.

Apple, based nearby in Cupertino, already employs many semiconductor experts who work closely with partners to customize chips to make its products stand apart, said Tim Bajarin, head of Creative Strategies, a consultancy.

"Let's be clear. This has nothing to do with Apple wanting to get into semiconductors. This is purely the need to bulk up their system design teams to enhance their ability to work with third-party vendors," Bajarin said.

Key Apple partners include Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz), which supplies the processors for Mac computers, and South Korea's Samsung Electronics Co Ltd (005930.KS: Quote, Profile, Research, Stock Buzz), which makes the iPhone processor.

But having a larger pool of chip expertise could come in handy if Apple contemplates moving into new product areas.