Why? It's largely because one of the most expensive components -- the processor -- is a custom-made, in-house Apple (AAPL) 1GHz chip called the A4. In April 2008, Apple bought a chip company called PA Semiconductor, which according to Forbes at the time was "known for its design of sophisticated, low-power chips." Forbes also said this was a "blow for chip-maker Intel," which had been trying to sell Apple on its low-power Atom chips.
PA Semi, like most chip-makers, licensed much of its intellectual property (in the form of chip designs) from ARM Holdings, a small British semiconductor design company that provides the building blocks to companies like TI (TXN), Qualcomm (QCOM) and now Apple. In fact, ARM's general manager of IP, Simon Segars, told me last year that they sell their famously efficient chip designs to "almost every semiconductor company... in one way or another," many of whom are still paying royalties after licensing fees.
ARM is an unlikely threat for Intel, which is comparatively enormous by almost every measure. (ARM, for example, employs 1700 people; Intel employs almost 80,000.)
But ARM has the ear of mobile device makers, including every major mobile phone manufacturer in the world. And with Apple's recent coronation the world's biggest mobile device maker, both by its numbers and ambitions, ARM now has its designs in the flagship device of an industry that is becoming more significant by the month. (Facebook, for example, expects that most of its traffic will be from mobile devices within just a few years.) Intel is largely still reliant on its old-time cronies like Dell (DELL) and HP (HPQ) for its business. Intel's next version of the low-power Atom chip, a revision of which was announced last month, is charged with having to drag Intel into the future.
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