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Apple is reportedly going to begin making its own chips and chipsets for the iPhone. It is fearful that hardware partners are sharing its secrets and competitors, and also upset about what it perceives as shortcomings in quality and perfomance.  (Source: kottkegae)
Apple seeks tighter control over the quality and cost of its cellular chips

Rocked by the slumping PC sales, the semiconductor industry really doesn't need more bad news.  However, reports indicate that Apple is making a surprising move that likely has some of its cell phone silicon partners reeling -- it is forming its own team design chips for its future iPods or iPhones.

In the past Apple has relied on partners, such as Infineon or Samsung Electronics Co., to design chips and chipsets for the iPhone.  The partnership was lucrative for the chipmakers, but for Apple it represented frustrations as the company hoped for lower power consumption and better graphical abilities. 

Apple has lured Raja Koduri away from Advanced Micro Devices graphics products group, where he was formerly chief technology officer.  Apple had already snatched Bob Drebin, the previous CTO.  In addition, Apple is filling dozens of hardware positions, the role of which it describes as "testing the functional correctness of Apple developed silicon."

Based on the site Linked-In, it appears that Apple now has over 100 engineers with extensive hardware experience.  These engineers worked formerly at leading hardware firms, such as Intel Corp., Samsung and Qualcomm Inc.  Apple is also advertising for a position designing chips that control displays, via the site Indeed.com.  With major chipmaker Spansion on the verge of folding, Apple is looking to snatch up the soon-to-be-unemployed engineers.  It participated in a special job fair for the employees facing impending layoffs.

Aside from possible improvements in quality and functionality, one perk Apple receives for designing its own chips is an increased secrecy.  Apple has long loathed having shared its tech surprises with chipmakers, only to see them leak to the press via loose lips. 

Apple Chief Executive Steve Jobs says that the acquisition of Silicon Valley start-up P.A. Semi was a key step towards Apple making its own iPod and iPhone chips.  He states, "You can't just go out and buy the chips off the shelf to do that."

Sources at Apple indicate that the company believes that information shared with chipmakers like Samsung is being shared with its competitors.  Samsung declined to comment on the allegations.

It is likely that Apple will continue using the ARM architecture for the iPhone, licensed from ARM Holdings PLC.  Its chief aim with the new ARM chips will be better battery life and better graphical performance.





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