Apple Buys Chipmaker P.A. Semi For $278 Million

Wondering what Apple (AAPL) was going to do with all that cash? Here’s one answer: The company has acquired small chip designer P.A. Semi for $278 million in cash, reports.

Late Tuesday, in response to questions from, Apple’s top spokesman said the deal is done. “Apple buys smaller technology companies from time to time, and we generally do not comment on our purposes and plans,” Steve Dowling said. The company is due to announce its quarterly earnings Wednesday.

The decision to centre the iPhone design around a chip that Apple could own marks a significant strategic choice by Apple Chief Executive Steve Jobs, and is aimed at ensuring Apple can continue to differentiate its flagship phone as a raft of competitors flood the market. According to a source affiliated with the chip company, Jobs and Senior Vice President Tony Fadell led the tiny group of executives who spearheaded the acquisition, which included negotiations that took place in Jobs’ home.

Apple’s choice is a blow for chip maker Intel (INTC), which has been trying to convince Cupertino, Calif.-based Apple to rely on Intel’s chips–particularly its latest low-power line up, called Atom.

In February 2007, P.A. Semi debuted a 64-bit dual core microprocessor which the company asserted was 300% more efficient than any comparable chips. It consumes only 5 to 13 watts running at 2 gigahertz. Telecommunications, networking and wireless companies embraced P.A. Semi’s work.

It will probably take more than a year before Apple products incorporate any of P.A.’s chips, says.

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