Reasons Behind Apple's Strategic Shift Into Chip Design

The Wall Street Journal explores the reasons why Apple has been moving towards designing their own chips rather than using off-the-shelf components. This strategic shift was first revealed when Apple acquired chip-designing company P.A. Semi last April. That news has since been followed by a number of new hires from AMD as well as online job postings looking for individuals to test "Apple developed silicon."

According to individuals "familiar with the matter", Apple's current chip plans include lower power designs to prolong battery life in the iPhone and iPod touch as well as improved graphics circuitry for better gaming and HD video playback. In addition to whatever competitive advantage Apple might get with their own custom designed chips, another benefit would be the ability to maintain more secrecy over their products.

People familiar with Apple's thinking say executives have expressed concern that some information shared with outside vendors could find its way into chips sold to Apple competitors

Jobs reportedly told P.A. Semi engineers that he specifically wanted to develop chips within Apple to prevent knowledge of them leaking out. Apple, of course, is well known for their secrecy. This secrecy has been harder to maintain in recent years due to the number of partners Apple must work with in launching a product. With the iPhone, we've seen rumors coming from both component suppliers as well as mobile carriers who need to be briefed about upcoming releases.

The Wall Street Journal points out, however, that this trend is contrary to most big electronic firms who have moved towards outsourcing components in an effort to reduce costs. Apple is not expected to launch products based on these internally designed chips until next year at the earliest.

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