During Apple's (NASDAQ:AAPL) iPhone launch event, the company's Phil Schiller gave out some details about the A8 chip found inside both the iPhone 6 and the iPhone 6 Plus. In particular, he claimed that the chip featured 2 billion transistors and fit in an area of just 89 square millimeters. Apple claimed that its prior-generation A7 featured 1 billion transistors in an area of 102 square millimeters, so the engineering feat pulled off here looks pretty impressive.
However, when Apple described the actual performance increase of the A8 over the A7 -- claiming 25% in CPU and 50% in graphics -- I was originally a bit puzzled that it took nearly twice as many transistors in order to get these fairly modest performance improvements.
That is, until I watched the rest of the presentation. While the CPU and graphics portions of the new A8 chip are certainly important, the extra transistors in the A8 over the A7 likely went to critical but less talked about features that aren't related to either the CPU or graphics processor.
Remember how Apple talked up its camera features?
Schiller spent great deal of time talking about all of the new and interesting camera features that the new iPhones offer.
"What makes your photos great are three things: the five-element lens, it's the imaging sensor, it's also the brains behind it all -- the image signal processor that's part of the Apple A8 chip, [emphasis mine]," said Schiller in the presentation.
Schiller also pointed out that the A8 has a "dedicated hardware block now to do advanced face detection."
Now, the inclusion of an image signal processor is not new; every credible smartphone system-on-chip has one. What's interesting, though, is that Schiller specifically made mention of a dedicated hardware block to do face detection.
What does this actually mean though?
I must admit that when Schiller pointed out that the new A8 chip had dedicated hardware to do facial detection, I whipped out my iPhone 5s to see if it could detect faces -- apparently it can.
This means that prior to the iPhone 6, Apple was doing the facial detection likely in software running on the main Apple A7 chip. So, if my "lowly" iPhone 5s can perform these functions, then what's the big deal about this dedicated facial detection hardware?
It is generally well accepted that a chip or a part of a chip dedicated to a single task or type of task will be more efficient than a general purpose processor running that same task. The downside, though, of dedicated hardware is that it not only requires an extra effort to build, but it takes up additional space on the chip, raising costs.
Now, for a company like Apple that makes its money selling high-margin devices, a little extra silicon area and some additional R&D power is probably worth it in order to improve the user experience in a meaningful way. In this case, Apple apparently saw fit to spend the engineering resources and the chip area budget to build dedicated facial detection hardware.
Is this a competitive advantage?
At the end of the day, investors simply want to know whether this all translates into a competitive advantage or not. I think it does. This is an example of where Apple's unique position of controlling the software, device design, and chip design really pays off nicely.
Not only can Apple, by virtue of its profitability and revenue base, afford to put in this extra engineering effort, but it knows exactly what it needs to have built based on its products.
That's not to say that companies like Qualcomm -- which, according to Strategy Analytics, grabbed over 50% of the entire smartphone processor market in 2013 -- design their chips in a vacuum. However, having complete control over everything can be extremely valuable.
Foolish bottom line
Not every company has the resources to do what Apple does. In fact, for most smartphone companies, I strongly believe that the best way to go is to buy chips from smartphone chip specialists like Qualcomm. However, for a company like Apple, there are very good technical and strategic reasons for it to design its own chips.
My hunch is that there are plenty more very technically compelling secrets inside of the A8, but unfortunately, the world outside of Apple will probably never know about them.