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Apple acquired PA Semiconductor back in April for a princely $278 million, provoking a flurry of rumours that the company was planning to move into chip design, with new processors for iPhones and iPods mooted.

The rumour was slightly offset with the release of Intel's Atom, with many suggesting the low-power chip could find its way into the iPhone before long.

However, speaking to the The New York Times, Steve Jobs has finally quelled speculation on the the nature of the acquisition by admitting, "PA Semi is going to do system-on-chips for iPhones and iPods."

Developing its own chips will allow Apple to distinguish the technology in the iPhone from the host of competing products all running on ARM-designed processors.