Daily Debrief: Why Apple's after a chip designer Video

Daily Debrief: Why Apple's after a chip designer Video Transcript

[ Music ] ^M00:00:06

>> Welcome to the Daily Debrief. I'm CNET's Kara Tsuboi. Here is CNET news writer, Tom Krazit, talking about a lawsuit going on between IBM and Apple over an employee who is, reportedly, leaving IBM for Apple. Why don't you explain the transition going on right now.

>>Sure. Well, Apple, in the last couple of weeks or so, agreed to hire this guy. His name is Mark Papermaster from IBM.

>>Um hum.

>>He has been a-- one of their top chip designers for a number of years. I mean, he's also doing some work in their blade server department; and IBM is actually not suing Papermaster, not Apple himself but they're suing him under -- or -- for violating his non-compete agreements and agreeing to go work for a competitor. They're defining Apple pretty broadly as a competitor. I mean, Apple, technically, has a server business. It's not exactly the biggest thing on their plate. But...

>>Sure.

>>They do technically have one, so.

>>And, of course, they're worried that Papermaster could share some secrets from IBM to Apple, this...

>>Yeah.

>>[inaudible]

>>I mean, it's-- you know it's interesting because Papermaster's expertise is in a chip architecture that Apple no longer uses. I mean, he's, you know, he's an expert in the power architecture which, of course, Apple dumped back in 2005 when it switched to Intel.

>>Um hum.

>>So it's kind of funny that way, you know. I mean the power thing is not something that's really currently on Apple's plate. But, you know, once an expert in chip design, always an expert in chip design. You can learn different architectures.

>>How do these non-compete issues get worked out in this industry?

>>Money.

>>[laughing]

>>I mean...

>>Exactly.

>>Generally, in California...

>>Ah ha.

>>They're considered pretty worthless.

>>Yeah.

>>You know, it's -- there's just too many people switching jobs, going to competitors in California to really enforce that. The suit was filed in New York, however, where IBM is headquartered.

>>Hmm.

>>And that may, or may not, be a more difficult undertaking for Papermaster and Apple to hook up. I mean, I think in the end, what happens is, is that IBM talks tough and, you know, says they're going to go after this guy and then Apple will-- makes them an offer and, you know, this goes away in six months.

>>Now, what's really, I think, most interesting about this case, is Apple's, perhaps, renewed interest in the chip manufacturing process.

>>Yeah. I mean, you know, they signaled pretty clearly that they were-- they wanted to get back into this, in more depth at least, when they bought a company called P.A. Semi back in April of this year. At the time, they said that they wanted P.A. Semi to work on chips for the iPhone and the iPod. I mean, Apple's basically going to be making its own iPhone chips further on down the line. I should say designing their own chips.

>>Okay.

>>They're not going to actually build them. They'll contract with somebody...

>>Yeah.

>>To do that really expensive part of the whole business. But, you know, this hire seems to signal that, you know, they're even more interested in this whole notion of chip design than, you know, perhaps we even thought with the P.A. Semi purchase. I mean, you know, this is a guy, in Papermaster, that has authored a lot of papers, has the respect of a pretty, you know, chummy organization in terms of the, you know, the world's chip designers and the, you know, the places they go and hang out in. [Laughing]

>>But, you know, I think it's going to be very interesting to see exactly how his hire influences where Apple goes, you know, in the future. I mean, I think if nothing else, it's always nice to have a chip design expert on board. That [inaudible] jobs, hey, you know, chip technology is evolving in this direction. Here's what you may want to do in order to stay on top of that.

>>Absolutely. And that's [inaudible] a lot of very broad applications. Everything from iPhone, iPod, to cloud computing, in the future.

>>Yeah. You know, I mean, it's going to be really [inaudible] to see. I mean, I don't think that Apple is gonna really, you know, expand its server market too much at the moment. I mean...

>>Yeah.

>>They have spent so much time over the last three or four years becoming a consumer electronics...

>>Get away from that.

>>So to jump back into that at this point would be a little bit weird, but...

>>Sure.

>>But, you know, they've got the world at their feet at the moment. They've got all this money. They've got, you know, surging sales in the Mac and the iPhone; and that is, you know, giving them the freedom to go out and maybe experiment and do a couple of different things they weren't necessarily in the position to do a couple of years ago.

>>Yeah. And the money to buy out Papermaster's contract.

>>Yes. Yes. Some [inaudible] will be heading to New York.

>>Yes. I think so. Thank you so much, Tom Kratiz. I'm Kara Tsuboi. We'll see you on the next Daily Debrief. ^M00:04:05 [ Music ]