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When Apple bought semiconductor start up PA a year ago, it appeared to be ramping up its own silicon activities, with a view to stealing a march in the all-important area of reducing power consumption for mobile devices, and to increasing its ability to keep competitive secrets up its sleeve for the iPhone and iPod.

Now it is reported to be putting that strategy into action, assembling an enlarged team of chip designers. According to The Wall Street Journal, a primary focus of the inhouse developments will be to reduce power in the mobile products, and to improve graphics capability for high definition video and virtual reality gaming. Apple signalled its new seriousness about enhancing the iPhone in hardware as well as software when it bought PowerPC designer PA Semi last April, and then when it hired Raja Koduri, formerly CTO of AMD's graphics group. Online job ads suggest Apple is looking to hire dozens of additional chip designers.

This is a break with the current handset industry norm of outsourcing chip design mainly to third parties - as illustrated most dramatically by Nokia, which has significantly cut its inhouse activities and relies more heavily on joint R&D with STMicro, Texas Instruments and others. It shows Apple's awareness that, as a one-trick pony in the mobile world with the iPhone/iPod Touch family, it needs to keep these well ahead of the pack, and to play its cards as close to its chest as possible when it does arrive at new differentiators. This could make it wary of sharing its breakthroughs with chip partners that also work with its competitors.

Apple refused to comment but when it acquired PA, CEO Steve Jobs said it was geared to running increasingly complex software on the iPhone and iPod. "You can't just go out and buy the chips off the shelf to do that," he said in an interview.

Apple is unlikely to become a mainstream chip developer, which would require massive resources and investment, but if it creates a low power, ARM-based processor this could hurt its business with Samsung and Infineon in a couple of years' time - although, as always in the silicon business, many glitches could slow its progress during that design period.

At the time of the PA acquisition, there was also speculation that Apple might be distancing itself from Intel with a partial return to PowerPC, and also that its own chip might go into a new portable device - such as a tablet/netbook - which would be a blow to Intel Atom and a win for the ARM-based faction. Apple has moved increasingly towards Intel x86 for its non-mobile products. PA Semi was founded with its sights set on Apple, since its original target was to get its low power PowerPC processors (which consume only 15 watts while running at 2GHz) adopted for Apple notebooks, a hope dashed by the computer maker's switch to x86. After that blow it gained most of its business from the defense sector.

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