Apple is grabbing some more headlines having recently hired a few more senior semiconductor executives.Â It builds on what they have been doing since they acquired PA Semi a while back and it appears they will go all the way to having their own in-house design and development team.
Apple is owning up to the fact that silicon has evolved into another form of software.Â Going back to our notes from the 2004 STMicro analyst meeting they were seeing that basic systems on a chip (SoC) were going into millions of lines of code (MLOC) just for a TV set.Â We’re no semiconductor analyst but we noted that the SoC segment of semiconductors was becoming a software business.
While a huge segment of the semiconductor business is in functional and commodity products a major growth (and higher margin) segment has been SoC.Â These are purpose-specific and basically just advanced software that happens to be compiled all the way down to silicon.
What Apple is doing is realitic and of course a bit smarter than what the average company is doing out there.Â Apple is far too large not to rely on major partners in the semiconductor industry to develop technology for them but they will be able to be smarter users and do some very special, focused things with their own team to make it harder to replicate their success and keep their secret sauce actually secret.Â They can push the envelope more with partners and also retain some proprietary control over some of the software-like elements.
This starts to bring up a broader discussion of chip-level, os-level and application-level platforms we evolve into a more consumer-focused, cloud-based world but that’s worthy of a separate post, maybe even a research note.
[Disclosure: Research 2.0 owns shares of Apple at the time of this writing.Â See our website for further disclosures.]