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061006: Samsung may sneak IBM back into Apple
Ed’s Threads 061006
Musings by Ed Korczynski on 06 October 2006

Samsung may sneak IBM back into Apple
Once upon a time, Intel made microprocessor (MPU) chips for PCs running Microsoft operating systems, and IBM made MPUs for Apple Macs. Last year, Apple loudly announced it was switching to Intel for Mac MPUs, and IBM lost a lot of business from one of its major customers. Intel won, and IBM lost, end of story. Right?

Maybe not. We’re now living in a world of “system on chip” (SoC) designs, where the functionalities of multiple discrete IC chips are integrated during the design into a single piece of silicon. The reasons are twofold: we can, and we must. We can create SoCs now that we can design a billion transistors into a single-chip. We must create SOCs for high-unit-volume chips, because the performance improves while the cost is reduced -- keeping all of the circuitry on a single piece of silicon has always been the least expensive way to go if you can make all of the pieces properly function. New electronic functionalities are typically first created as separate chips, but within a few years those functions are usually integrated into a previously existing chip.

We’re also living in a world of “rebranding” and outsourced manufacturing of chips. For example, the custom MPU inside the Microsoft Xbox was designed by IBM and manufactured by Common Platform Alliance (CPA) member Chartered, for a Microsoft-branded chip.

Apple has created a blockbuster iPod product line, currently selling more units and generating more profit than its flagship Mac computers. The company has been issuing new iPod variations every 6-9 months, and they are very profitable, with reportedly >50% gross margin. By comparison, the Xbox is rumored to sell with a negative 30% gross margin -- i.e., Microsoft is losing >$150 on each sale.

To keep the iPod bill-of-materials (BOM) for construction as low as possible, Apple has pushed integration into SoCs. The latest iPod Nano includes a SoC from Samsung that reportedly uses an ARM-core for the MPU. Prior generations of iPods had chips with brand names from Samsung, Wolfson, and Philips (now NXP) on the PCB, but no longer. The latest iPod Nano’s include three chips labeled as “Apple” ICs which are reportedly from these three companies.

Last year, Samsung announced that it had licensed the PowerPC-core IP from IBM for inclusion in SoC designs. Recently IBM announced new low-power PowerPC-cores as well as hardened ASICs for SoCs. IBM’s new 464FP H90 ASIC core is specifically promoted to “allow customers to more easily customize a chip design and have it manufactured with IBM or at Common Platform manufacturing facilities,” i.e., Chartered and Samsung.

AMD, though not in the CPA with Chartered and Samsung, is another partner of IBM’s working on silicon-on-insulator (SOI) instead of bulk silicon wafer manufacturing. President Hector Ruiz is reported to have declared that Apple will buy chips from AMD. It could happen.

Meanwhile, Apple has taken the unusual (for Apple) step of pre-announcing a major new product: iTV. This smallish box is intended to be the center of your new digital living room for 2007. Which MPU will power the iTV? It could easily be a PowerPC-core produced by the CPA, but it might only show “Apple” on the outside package. The same could be said of any future “iMumble” hardware product fielded in the next few years -- Samsung could sneak IBM MPUs back into Apple products.

– E.K.

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061006: Samsung may sneak IBM back into Apple

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Ed's Threads is the weekly web-log of SST Sr. Technical Editor Ed Korczynski's musings on the topics of semiconductor manufacturing technology and business. Ed received a degree in materials science and engineering from MIT in 1984, and after process development and integration work in fabs, he held applications, marketing, and business development roles at OEMs. Ed won editorial awards from ASBPE, including interviews with Gordon Moore and Jim Morgan, and is not lacking for opinions.