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The History of Intrinsity, and the future of Apple…

Fascinating article on the background of Intrinsity. The specialist fabless semiconductor company which is responsible for Apple’s A4 processor in the iPad. If you have time to read the full thing then do so. If not then I’ve cherry picked the stuff that is less technical, and speaks to what this means moving forward for Apple, and other manufacturers…

In September 2008, Samsung went against ARM’s suggestion that any semi-custom implementation of the Cortex-A8 wouldn’t be faster than TI’s OMAP3 version. They inked a deal with Intrinsity to develop a FastCore version of the Cortex-A8 called as (sic) the Hummingbird. In the meanwhile (sic), Apple was also looking for a way to speed up the Cortex-A8 for their iPad. It is believed in industry circles that Samsung asked Intrinsity [to] develop a FastCore version of the Cortex-A8 at the behest of Apple for A4, and also ended up using it for the S5PC110 / S5PV210 after splitting the cost (rumored to be around $55 million). The ‘hardening’ was completed in July 2009, just in time for the rest of the A4 SoC to be taped out for the iPad and the S5PC110 for the Samsung Galaxy S.

Off topic, but this story when taken in its entirety reminds me in some ways of what Microsoft did to Sony over the processor design for the 360 and PS3. Apple playing the part of Microsoft here. Except in that story IBM had two secret projects going. The second (for the 360′s CPU) which started later and learned from the mistakes of the first (making the PS3′s CPU) at Sony’s expense. Obviously in that tale neither Microsoft or Sony were involved in a conscious collaboration. Far from it in fact, as we all know. But ultimately some would say Microsoft walked away with the better deal.

While introducing the iPad in January 2010, Steve Jobs specifically commented on [the] A4 as the best and most complicated chip Apple had ever designed. Industry watchers were skeptical when it became obvious that the A4 was just a SoC hooking up various IPs available from different companies. Once it became evident that Apple had indeed purchased Intrinsity, Steve Jobs’s claim began to make more sense. In effect, Apple had indeed developed their most advanced silicon to date!

Steve’s claims always need to be taken with a healthy dose of anti-RDF medicine. But Apple have certainly got an exclusive design hybrid of the existing ARM Cortex-A8 core – and now control that design themselves with this purchase.

In April 2008, PA Semi was acquired for $278 million. Their claim to fame was a 64 bit dual core processor called the PWRficient. The analysts were greatly surprised at this acquisition since PA Semi’s IP had no place in the roadmap of any of Apple’s products (except, probably, the Apple TV) since its power consumption was too high at 25W. The consensus was that the purchase was made for the manpower with VLSI experience that PA Semi would provide to Apple’s team for designing chips for future generation of products in the iPhone / iPod / iPad line. Then, again, most of the PA Semi engineers have since moved on from Apple to work in a startup named Agnilux (which was recently acquired by Google).

When seen in the above context, it is really easy to determine why Apple needed to acquire Intrinsity. Being the force behind the performance of the Cortex-A8 in the A4, it makes sense for them to acquire the engineering talent and the technology behind this. Not only would it improve the performance of the ARM cores in the future members of the A4 family (Intrinsity was supposedly working on hardening the FastCore version of Cortex-A9), it would also prevent the competition (read, Samsung) from utilizing this technology to make fast app processors for phones such as the Samsung Galaxy S.

This is what I was talking about above when I referenced Sony and Microsoft above.

Founded in 1997 by 22 veterans in the microprocessor design industry, the firm [Intrinsity] initially worked towards developing interesting circuit design techniques and related design infrastructure for performance improvement (speed of circuit operation) using domino logic.

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From a technology perspective, domino logic has long been regarded with suspicion by many people because of the associated problems. Though speed and performance increase, the power consumption as well as integration with the rest of the design flow remains an issue.

It’s worth noting that one of the problems with Intrinsity’s particular method of increasing processor speed does have some power consumption issues. Something that PA Semi is said to have specialised in. This is pure speculation on my part, but perhaps there was some crossover in the aquisitions by Apple there. PA Semi were originally believed by many to be the brains behind the A4.

As noted [above], Apple has never been able to retain the important employees from its semiconductor acquisitions. It remains to be seen how much of a leeway from the usual Apple work culture is given to Intrinsity after the acquisition, as this would probably decide how much of the talent actually continues to remain in Apple to contribute down the road.

One would hope, for Apple’s sake, that they have learned from the past, and perhaps tied important people to some contracts that both protect Apple, and keep those people happy.

From Intrinsity’s perspective, the acquisition probably comes as a relief. [T]he company [had] been reliant on a few big customers for revenue and had to get back to the venture capitalists for more and more funding every few years.

In a nutshell, the still interesting but quite detailed financial stuff that I’ve left out boils down to Intrinsity being a venture capital backed startup in the later stages of repeat funding, which had yet to find a sustainable revenue stream. Intrinsity did have some successes, but just before Apple picked it up (possibly for much less than investors had put into it) Intrinsity’s outlook was indeed bleak. Despite it having a great, if niche, set of skills and designs to sell.

Some think Apple paid more than others for Intrinsity…

From Apple’s perspective, $121 million or sub-$50 million really doesn’t matter, since the amounts happen to be a drop in the bucket for a company with more than $40 billion in the bank.

True. Apple is a company that could buy ARM, for example, without breaking a sweat.

Apple has long claimed that they needed to design their own CPU in the iPad series to decide where the exact performance push would go. With Intrinsity, they were able to get a fast core and split the hardening cost with Samsung. It is not exactly clear how Apple can customize the CPU any further than what Intrinsity would do as an outside job without holding an architecture license from ARM (MPR suggests that Apple also possesses an architecture license, though we are unable to confirm this from other sources).

Perhaps Apple still plans to strengthen its hold on ARM. But also it was mentioned above that Intrinsity are supposedly working on hardening the FastCore version of the Cortex-A9 too. So that is at least one more possible iteration of their “custom” processor potentially in the pipeline. A CPU that would probably tie up quite nicely with a GPU from Imagination that I mentioned here.

If Apple was hoping to cut down on the cost of hardening future CPU cores by purchasing Intrinsity, it doesn’t seem like such a great decision keeping the above points in mind. On the other hand, if the aim was to prevent the competition from getting access to this technology, it may succeed to quite an extent. All in all, it can’t be said that Apple’s acquisition of Intrinsity is a slam dunk.

No, but it is a safe move. Even if a hardened A9 core doesn’t materialise, and even writing off a few hundred million as they also did to some degree with PA Semi, it’s still their smartest move to date in semiconductor acquisitions!

What repercussions does this acquisition have for the rest of industry? It is still not clear whether Intrinsity would continue to support any of their existing customers (AMD/ATI and AMCC — whether they are still using FastCore technology is not known). However, we can safely say that the FastCore version of the Cortex-A8 on Samsung’s 45nm node is the final Intrinsity product available for other fabless semiconductor companies to license. This hardened macro (called the Hummingbird) has found a place in some of Samsung’s app processors, but we are not aware of any other licensees for this.

By purchasing Intrinsity Apple have actually done what a lot of people suspected might be a motivation for them buying ARM. They’ve cut some competitors out of a hardware loop.

Of all the companies involved, it appears that Samsung’s app processor division would suffer the most in this transaction. It is quite possible that they were counting on a FastCore version of the Cortex-A9 at the 32nm node for their next generation product in the S5PC line. The online rumour mill suggests that Intrinsity had already been working on a FastCore version of Cortex-A9, but it is not clear whether it was Samsung who had requested it (most likely). The status of this FastCore after Apple’s acquisition remains unclear.

I suspect Apple have plans for it.

While Samsung’s app processor division could end up unhappy, things continue to bode well for Samsung’s foundry business. Apple was never likely to move away from them for future members of the A4 product line, but Intrinsity’s acquisition and their previous experience with Samsung’s process flow only continue to strengthen this belief.

Apple are still going to be using Samsung to make these things. Which is cash in SamSung’s pocket. And perhaps Apple can pay with silicon instead of cash for manufacture in future. Which might be a win-win for both companies.

Intrinsity’s technology, back in 2001, was probably a bit ahead of its time. Undoubtedly, their most outstanding success to date seems to be the Hummingbird core in the 45nm node, showing how their technology has matured and delivered outstanding results for a company of Apple’s stature to use in their own products. Unfortunately, for the rest of the industry, the technology has been rendered no longer licensable.

In closing, it can be said that there are no outright winners in the asset acquisition. While Intrinsity’s investors may have just about broken even or may have even had to get out with a big loss, Apple has its hands full in trying to get some returns for the investment in their †third semiconductor company acquisition. In particular, considering the fact that they don’t seem to have had much success with the first two, it will be interesting to watch how Apple’s management style works in a small fabless semiconductor company.

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Current licensees of Intrinsity’s technology and the Samsung application processor group (particularly if the rumors of Intrinsity’s current activities with respect to the Cortex-A9 turn out to be true) seem to be left in limbo.

The industry, in general, has lost the ability to take advantage of a technology whose time seemed to have just arrived.

Something perhaps Apple has lucked into snapping up.

Intrinsity’s Historical Financial Timeline.

†In November 1999, Apple acquired Raycer Graphics for $15 million dollars, supposedly for the 3D graphics related patents that the company held. People continued to speculate for 2 or 3 years after this wondering when the products from this acquisition would replace Nvidia’s role in Apple computers. Unfortunately, this never came to pass, and people from the Raycer acquisition just moved on to join companies like SGI and Nvidia.