Apple Takeover of Intrinsity Now Official – What is the End Game Though?

Event Summary

April 27, 2010 – Apple has acquired a small Austin, Texas-based company called Intrinsity, known for making performance-enhanced versions of a computer chip often found in mobile devices. The deal, which closed late last month and was confirmed by Apple on Tuesday, shows the company continuing to try to gain an edge in the mobile device market by purchasing technology and chip expertise.

Quick Take

Analytical Summary

• Current Perspective: Negative on Apple’s acquisition of embedded IP processor core vendor Intrinsity. Apple’s covert takeover of Intrinsity – confirmed weeks after the actual acquisition – gives Apple control over Intrinsity’s custom FastCore technology, but the move puts Apple’s 2008 acquisition of PA Semi in a dim light and Apple’s overall chipset strategy remains unclear.

• Vendor Importance: High to Apple, since Apple needed to acquire Intrinsity as it remains committed to a strategy of controlling elements of the silicon components within its iPad and iPhone mobile device technologies. The iPad A4 processor is based upon the Hummingbird core processor that Intrinsity developed in collaboration with Samsung and thus could yield controlling vital IP processor technology in order to sustain asserting iPad competitive edges in areas such as performance and battery life.

• Market Impact: Moderate on the mobile device silicon market segment, because Apple’s takeover of Intrinsity will not compel mobile silicon players to alter their product development and market strategies. For example, Samsung already possesses the Hummingbird core processor technology with plans to apply Hummingbird to other upcoming mobile device products.

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