DoD may push back on Apple's P.A. Semi bid

SAN JOSE, Calif. — Apple Inc. may have to face the ire of the U.S. Department of Defense following its planned acquisition of P.A. Semi Inc. The startup's PWRficient processor is designed into DoD programs in every major branch of the armed services, said one P.A. Semi customer who expects Apple will end production of the parts.

"We've had customers saying they are going to the DoD on this one," said a source in one of the several companies making embedded computer boards with the processor.

The source said he is aware of more than 10 defense systems using the PWRficient CPU, one of which recently forecasted it will use 70,000 of the chips over the next ten years. The board company alone forecast it would sell $100 million in products based on P.A. Semi chips over the next four years. Users include defense giants such as Lockheed Martin and Raytheon, the source said.

"I've never seen such fast adoption of a product in the mil/aero world," said the source, who asked not to be named. "Typically users in this area take a wait-and-see approach on new products, but that didn't happen this time," he added.

P.A. Semi got kudos from analysts when it announced its PA6T-1682M in February 2007 because the dual-core 64-bit PowerPC variant consumed as little as 15W while running at up to 2 GHz. Cards using the chip delivered significantly greater performance than their competitors while shaving power consumption by as much as 30 percent.

The milestone marked a hat trick for founder Dan Dobberpuhl who led teams that brought both ARM and MIPS architectures to new lows in power consumption. At Digital Equipment Corp., Dobberpuhl helped design the StrongARM chip that eventually became the XScale processor. Later, he launched a startup called SiByte that created a low-power MIPs processor acquired by Broadcom.

On Monday (April 21), P.A. Semi informed its customers it was being acquired and it could no longer guarantee supplies of its chips. The startup did not identify the acquiring company but said that company may be willing to supply the chip on an end-of-life basis, if it could successfully transfer a third-party license to the technology.

That license in question is probably a PowerPC architectural license that P.A. Semi has with IBM Corp. that allowed the startup to design its own PowerPC chip from scratch. IBM was not immediately available for comment on the issue.

"I don't know how a Lockheed Martin or a Raytheon would take the news that the part might not be available after a few months or perhaps two years," said the source. "Typically, these military program last for many years," he added.

Apple has not publically detailed its plans for the acquisition, but may speak on the issue during an earnings cal scheduled for today (April 23). P.A. Semi customers were told the acquiring company was not interested in the startup's products or road map, but is buying the company for its intellectual property and engineering talent.

P.A. Semi reportedly has about 150 employees and is being acquired by Apple for $278 million.