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Apple shunned superstar chip start-up for Intel

PA Semi has the goods

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Exclusive Did Apple make a mistake by switching to Intel? We may never know, but Apple had more options than has been previously reported, The Register can exclusively reveal.

A chip start-up that created a high performance, low power processor compatible with existing Mac software had been working closely with the computer company for many months.

Apple was looking for a new chip supplier largely because it was struggling to find a decent part for its key laptop line. IBM could not deliver the right performance per watt characteristics needed for slim, powerful kit and was struggling to produce chips as efficiently as Apple would like.

PA Semi - a maker of low-power Power processors - formed a tight relationship with Apple - one meant to result in it delivering chips for Apple's notebook line and possibly desktops. The two companies shared software engineering work, trying to see how Apple's applications could be ported onto PA Semi's silicon. When word leaked out that Apple had signed on with Intel, it shocked the PA Semi staff, according to multiple sources.

"PA Semi was counting on that deal," said one source. "They had lots of guys walking around in a daze when Apple went to Intel. They had no idea that would actually happen."

PA Semi secured a large amount of venture funding due in part to the stellar technical reputation of its staff. Former Digital alumni include VP of architecture Peter Bannon - aka Mr. Tanglewood - Leo Joseph, the COO and Jim Keller, the VP of engineering. Several of these engineers did much of the key work behind DEC's Alpha chip, which for much of the 1990s was consistently the fastest microprocessor on the market. Apple and PA also shared some heritage: PA Semi's Wayne Meretsky was formerly the technical lead for Mac OS at Apple during the company's transition to PowerPC.

Behind the scenes, however, the notion of an Apple win helped stoke investor confidence.

PA Semi's first processor - the PA6T-1682M - is due to sample in the third quarter of 2006 as a 2GHz, dual-core product with two DDR2 memory controllers, 2MB of L2 cache, and support for eight PCI Express. The product will ship in volume next year and be followed by single-core and quad-core chips. It also supports the Altivec floating point instruction set that currently provides a massive speedup for multimedia and scientific Mac software. At 2GHz, the chip consumes just 7 watts of power according to PA. Intel's Core Duo consumes between 21 and 25 watts.

It's features such as these that made PA Semi an obvious fit for Apple.

Until now, rumors of a PA Semi and Apple tie-up have been present, albeit thin.

Chip analyst Linley Gwennap of the Linley Group has written in the past that "PA Semi was also widely rumored to have pitched its processor to Apple for use in notebook computers."

In an interview with us, Gwennap clarified his position by saying, "My understanding is that there was certainly interest at Apple, but I don't think anything close to a commitment. I do think there were some pretty high-level discussions going on - possibly something along the lines of, 'We're going to use your product if everything goes well.'"

But sources say the discussions went much further than that, with PA Semi executives thinking they were all but assured the Apple win. One source noted that PA Semi CEO Dan Dobberpuhl [ACM interview] thought Apple's hints of moving to Intel were just a bargaining tactic. The software work the companies were already doing, along with PA Semi's Power ties made it the more practical choice in Dobberpuhl's mind and one that Apple could not avoid.

Dobberpuhl was furious when he learned of the Intel deal, our sources said.

One problem with moving to PA Semi would be that the company was not going to ship its low-power multicore product in volume until 2007. The wait might have been worth it for Apple, since it would require no changes to the company's software base and help it save face by avoiding Intel.

By choosing to move to microprocessors from Intel, Apple has created headaches for some of its most important software partners, who face a difficult and lengthy porting process. Apple has also had to provide a compatibility layer called Rosetta, from Transitive, to run old Power PC software. Such issues could have been avoided if Apple had found a compatible, and competitive chip supplier or two.

PA Semi remains one of the most ambitious silicon start-ups in several years. It has more than 150 employees and abundant venture capital backing. Texas Instruments, one of the company's investors, is believed to be provide the manufacturing fab for the PA chips. The loss of the Apple deal seemed to affect the company's standing in the short-run - it only recently securing another round of founding. Investors, however, must have gotten over the Apple issue, as they just dished out a whopping $50m.

PA Semi now plans to go after the embedded market and to sell chips for storage devices. Dobberpuhl declined to answer our questions about past, current or potential customers. "At this point, I don't want to be more specific about customers," he said.

The company still seems to have a bright future, particularly for a company playing in the ultra-competitive and capital demanding processor market. But it would have become an overnight star had it come out of stealth mode with an Apple win. ®

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