Apple buys embedded chipmaker for $278 million in cash

In response to media inquiries, Apple disclosed early Wednesday that it had purchased embedded chipmaker P.A. Semi, whose chips may end up in the Cupertino company's devices.

P.A. Semi was founded in 2003 by a lead designer for the Alpha and StrongARM processors. It currently employs about 150 and focuses on low-power chips that can be used in portable devices.

At first glance, the tie-up may seem a little strange, especially considering Apple's closely partnership with Intel. However, Intel has been having troubles with its new Atom processors, which may have led the company to make a move.

Forbes reports that talks between the two companies only began in the last few weeks, and were kept hush-hush. Jobs even used his home for negotiations.

Intel's new Atom processors, intended for use in ultra-portables and mobile devices, seem to be plagued by performance issues compared to ARM processors. Additionally, Atom chips will cost far more, and are not as power efficient, which is vital to the success of any mobile chip where power consumption directly affects battery life.

Neither P.A. Semi nor Apple have provided any further details on the deal, although some may come as part of Apple's quarterly conference call later this afternoon.

The move is somewhat surprising, considering talk among insiders seemed to indicate Intel was pushing hard for Apple to adopt Atom for its next-generation iPhone and iPod devices, as well as any other ultra-portables the company might have up its sleeve.

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