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The Santa Clara, California company was founded in 2003 and is best known for lower power chips based on IBM's Power PC architecture. In February 2007 it introduced a 64-bit dual core chip that it said was 300% more efficient than rival processors.

Apple currently uses ARM chips in the iPhone and iPod touch, though there has been much talk that it may switch to Intel's new Atom processors. According to Forbes,

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Steve Jobs headed the negotiations with PA Semi, leading the business magazine to suppose that Apple has decided to base the design of its mobile devices on a chip of its own. Other commentators, however, have said that PA's chips are too powerful for Apple's current mobile devices and sugested that the acquisition points to new products.

Apple would not comment on its reasons for the purchase.

"Apple buys smaller technology companies from time to time, and we generally do not comment on our purposes and plans," said spokesman Steve Dowling.

In fact Apple often buys software companies, but rarely has it invested in a hardware business. Having been a founding investor in ARM, it sold its stake a decade ago.

Apple is believed to have paid $278 million for PA Semi, though it would not confirm that terms of the deal.