The billion dollar Apple iPad processor
It seems that developing that new ARM processor for the new iPad tablet computer will wind up costing Apple about $ 1 billion, leaving some people wondering about the investment.
When Apple purchased PA Semi, a company specializing in ARM processor design, they laid out a cool $278 million for the small company. That begins to look like petty cash, though, when all costs for the development of a chip in that class are considered. Industry experts estimate that the total development cost could approach, or even exceed, $1 billion, according to information in a New York Times report. Even at that, Apple is not the only company that has decided to forego purchasing a CPU from a one-stop-shop like Intel and instead design their own and have it built by one of a number of chip foundries that specialize in doing just that.
The report says, “Apple, Nvidia and Qualcomm are designing their own takes on ARM-based mobile chips that will be made by the contract foundries,. Even without the direct investment of a factory, it can cost these companies about $1 billion to create a smartphone chip from scratch.” If one wants to build their own processor as well as design it, the factory alone will cost about $3 billion. More and more companies are willing to make these large investments, prompting the belief that, in the words of the report, “the chip wars are about to become even more bloody.”
Apple has been at the forefront of the trend away from chips made by Silicon Valley giant Intel, beginning when it used a non-Intel chip in the iPhone. Apple has upped the ante considerably by designing a new chip especially for the iPad, and having it manufactured specifically for them. Is the expense worth the return? Steve Jobs thinks so, saying when the iPad was announced, “iPad is powered by our own custom silicon. We have an incredible group that does custom silicon at Apple. We have a chip called A4, which is our most advanced chip we’ve ever done that powers the iPad. It’s got the processor, the graphics, the I/O, the memory controller — everything in this one chip, and it screams.”
Obviously, some influential people think that processors by and for Apple are a good idea.
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