Apple Is Going Chip Crazy!

Chips, chips, chips! Apple just can't get enough of designing them.

Feb 3, 2014 at 12:30PM

It's pretty amazing how much flak investors give Apple (NASDAQ:AAPL) for not "innovating." While the company hasn't introduced a new product category in quite some time, it has spared no expense in building up its in-house semiconductor IP design and system-on-chip integration teams. Indeed, Apple appears to be going "chip crazy" in its aggressive hiring for its semiconductor teams. Let's find out just how all-out Apple is really going here.

Did somebody order some chips?
A trip to Apple's job boards and the entry of the fairly innocuous keyword "chip" leads to no less than 114 job postings:


Source: Apple

This is probably doesn't cover anywhere near the breadth of chip-related engineers that Apple is looking to hire. A few hot keyword searches such as "CPU" and "GPU" turn up a broad swath of most likely disjointed results:


Source: Apple


Source: Apple

That explains a good chunk of Apple's R&D increase
Take a look at the trend in Apple's research and development spending over the last several years:


Source: YCharts

Over the last four years, Apple has nearly quintupled its R&D spending. While a good chunk of this is likely on actual device development and software development, a significant portion is likely dedicated to the development of world-class mobile chips. Further, Apple's R&D spending continues to skyrocket, suggesting that the innovation engine -- a good part of which is related to chips -- is still quite alive.

Why this is important
At the end of the day, Apple's mission is to develop the world's best products. While many semiconductor industry bears continue to chant the tired mantra that today's processors are "good enough," the truth is that new experiences and new functionality are fundamentally driven by advances in semiconductor technology and designs.

While Apple could certainly get away with using an off-the-shelf chip design from Qualcomm (NASDAQ:QCOM) which does a superb job with its system-on-chip products, it is likely that Apple seeks to optimize its processors in a way that differs from what the rest of the merchant chip industry is doing. We already saw Apple's A7 blow the competition away across the board, and it is likely that future A-series processors could hold a pretty sizable performance-per-watt lead on iOS over the rest of the ARM (NASDAQ:ARMH) chip players. Apple builds chips using an ARM architectural license, meaning that Apple designs the chip to be able to run the same software that ARM's own designs do. 

Foolish take
Apple is dead-serious about chips, and it is encouraging to see that Apple is really pushing hard on the semiconductor side of things. While it is unlikely that the trend will be for the device makers to do their own chips -- the merchant landscape is quite exceptional today -- this is just one more thing that makes Apple so interesting from an innovation standpoint. 

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Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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