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Apple just paid $18 million to buy a small chipmaking factory

Tim CookGetty Images, Justin SullivanApple CEO Tim Cook

Apple paid $18.2 million to buy a small chipmaking factory in San Jose that could help the company test new chips to power its products, according to a report in the Silicon Valley Business Journal.

Apple purchased the 70,000-square foot facility from chipmaker Maxim Integrated Products last week, the Business Journal said, citing public records. The facility includes chip manufacturing tools and is located near Samsung Semiconductor, one of the main manufacturers for Apple’s A9 processor, the chip at the heart of the iPhone.

Apple currently designs the main processor used in its iPhones, iPads and Apple Watch chips, while Samsung and and TSMC manufacture the actual chips.

The real estate deal suggests that Apple may want to take a more hands-on role creating its chips, but does not necessarily mean the company will start manufacturing its own chips.

For one thing, the facility is small. As the marketing material for the property says, the facility is well suited for “prototype, pilot and low-volume manufacturing.”

It’s not unusual for chip companies to operate special, small-scale “fabs” where new chip designs are tested and tweaked, with volume production handled at significantly larger facilities.

The equipment in the fab is also geared for the analogue and mixed-signal chips that Maxim develops, and is not cutting-edge enough to produce Apple’s A9 processors. The A9 processors feature tiny transistors measuring 14 nanometres and 16 nanometres, which is pretty much the most advanced technology available today. The equipment at the Maxim facility, by contrast, is capable of building chips with much less advanced transistors that measure anywhere from 600 nanometres to 90 nanometres.

Apple could upgrade the facility by purchasing and installing more cutting-edge equipment. Or it’s possible that Apple wants to use the facility to test other types of chips besides its line of processors.

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