Apple gets into mine-sweeping, missiles and storage

General Jobs

Apple CEO Steve Jobs may need to order up a camouflage version of that infamous mock turtleneck.

His company bought chip start-up PA Semi this week - a move which results in Apple inheriting a business that stretches from storage systems to missiles. PA Semi's version of the PowerPC processor became popular for such an eclectic array of kit thanks to its low-power, high-performance attributes. It's a marvel of sorts for companies working in the appliance and embedded systems markets.

As we've opined, Apple seems to have little interest in nurturing PA Semi's budding businesses. Rather, it's likely looking to bring the company's talent in-house for advice on mobile gear and possibly to push forward with a wider range of embedded devices such as media appliances and perhaps consoles.

In typical fashion, Apple has refused to disclose its exact plans for the PA Semi gear or engineers. And, as we hear it, this code of silence extends to companies that have embraced the PWRficient chips.

Extreme Engineering Solutions is one company that hopes Apple will continue the PWRficient line. It has concocted a dozen embedded product designs around the processor for the military, including systems for mine sweeping, signals intelligence and radar.

Chips with everything

"We have been working with PA Semi since the beginning," said Extreme CEO Rob Scidmore. "There are certain features associated with the chip that make it advantageous for military applications with even weapons being one of those applications."

Scidmore declined to answer further questions on the weapons systems, although another source close to PA Semi said that the company's various customers expected to see $100m in missile-related orders alone over the next five years.

Part of PA Semi's magic stems from aggressive use of so-called power stepping technology. The PWRficient chip could drop down to 500MHz and 5-10 watts when in minimal use and then jump up to 2.GHz and 29 watts in about 20 microseconds. Such power control is a a big help for the military on, say, radar applications where a system spends a lot of time in idle mode and then needs to burst into action to analyze data.

These same characteristics appealed to the likes of NEC and Mercury Computer Systems. NEC centered some storage gear around PA Semi's parts, while Mercury looked to place PA Semi at the heart of its future servers used for signal and image processing.

It seems almost certain that Apple will crush these companies' hopes and dreams by keeping PA Semi's products to itself.

Such a policy, however, brings up interesting questions, since companies working with the defense industry must often commit to long-term supply deals. And taxpayers may not be too thrilled about the prospect of funding new missile designs just because Jobs wanted a new toy.

So, will the military step in to force Apple into the defense contractor and microprocessor design games? We doubt it, but stranger things have happened.

Those committed to PA Semi but now in need of shifting gears will likely turn to another PowerPC chip maker in Freescale or perhaps look at some of Intel's new embedded chips coming as part of the Atom line. Such products, however, trail PA Semi by anywhere from 18 months to two-years.

Overall, it's interesting that PA Semi's management and investors would be willing to trade in this diverse business for a modest pay out by Silicon Valley standards. The VCs poured more than $100m into PA Semi only to get $280m back. Don't get us wrong. It's good work if you can get it. But it seems like there was a real desire to cash out now rather than taking the long-term approach to see if these other bets paid off in style. ®