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Does Apple's latest hire signal more chip making in future?

November 4, 2008

Surely by now you’ve seen some of the flat mainstream media reports on IBM’s suit to block an employee’s move to Apple. And by now, you probably know the facts: Mark Papermaster, a 26-year IBM veteran who worked on the PowerPC family and most recently worked in IBM’s blade server division, is being sued by Big Blue for allegedly violating a non-compete agreement that prohibits him from working at any competitor for a year following his exit from IBM. If the agreement is upheld, Papermaster may not be able to work at Apple until late 2009.

The questions being presented by most mainstream media outlets have to do with if IBM will win the suit. What should be asked, however, is what’s prompting Apple’s interest in Papermaster.

The agreement, signed by Papermaster in 2006, aims to protect IBM IP and focuses on three main points: that Papermaster may not work at or for a "significant competitor" to IBM, a "major competitor" to IBM, or a business entity that competes with an IBM business unit or division. So, judging by the wording of the agreement, Apple would have to be considered a competitor to IBM for IBM to win this suit.

Is Apple about to launch a server effort that would make Papermaster’s work at IBM’s blade-focused group attractive? It’s doubtful that the consumer electronics giant would spend its resources there.

Could Apple be interested in Papermaster’s input on a cloud computing hardware infrastructure effort, perhaps in relation to its iTunes brand? Maybe. Apple’s iPod and iPhone lines are becoming more and more connected. And Tony Fadell*, Apple’s top iPod division exec, is leaving the company, which could signal a shift in strategy for iTunes from download-centric to more robust streaming. If Papermaster can beat the IBM suit, he’ll replace Fadell as Apple’s senior VP of devices, with responsibility for the company’s iPod and iPhone hardware-engineering teams.

Really the only place Apple and IBM arguably could be considered competitors is on the PowerPC front. Papermaster has been credited as being one of the key architects behind IBM’s PowerPC design, and he surely took a meeting or two (or 100) with Apple execs when the Mac maker was IBM’s largest PowerPC customer (before Apple’s move to Intel chips in 2005).

You’ll recall that Apple paid $278 million for PA Semi in April, bringing it into the chip-making realm. PA Semi design’s specializes in low-power PowerPC MPUs for military market embedded systems.

Speculation at the time of the PA Semi buy was that Apple would cut out Intel by bringing chip making in-house and therefore allowing it more control over its Mac, iPod, and iPhone designs. 

Is the Papermaster hire a sign that Apple may soon expand on the PA Semi buy, building out a PowerPC-based or other chip architecture-based portfolio for its products? It’s possible that is what prompted Apple’s interest in Papermaster. And adding to that theory, Apple is openly hiring CPU engineers (just look at its job board).  Well known among the EE set, putting Papermaster in a prominent position at Apple could be a way to entice other engineers to join the company.

What do you think about Apple’s effort to hire Papermaster? Is it a precursor of more in-house Apple chip work? And should the IBM non-compete agreement be upheld? Share your thoughts below.

*Updated, Nov. 5: In a statement on its Papermaster hire, Apple confirmed yesterday Fadell and his wife, Danielle Lambert, VP of human resources, are reducing their work at the company for personal reasons. Fadell will remain at Apple as an advisor to the CEO. Lambert will depart the company at the end of this year after a successor is in place. This blog post originally cited reports on the executive changes.

Posted by Suzanne Deffree on November 4, 2008 | Comments (14)

November 24, 2008
In response to: Does Apple's latest hire signal more chip making in future?
SemiMike commented:

Think how much better off the world would be with IBM and Apple's first choice of Motorola instead of Intel chip long ago! 68000 was way ahead of Intel's many attempts to handle more than 64K of memory. And wouldn't Moto have been better off if they simply allowed IBM to use custom version of that chip, instead of telling them NO and sending them to Intel???


November 12, 2008
In response to: Does Apple's latest hire signal more chip making in future?
AC commented:

If Papermaster is someone so important, then IBM has every right to protect their own IP from potentially being stolen by others.


November 5, 2008
In response to: Does Apple's latest hire signal more chip making in future?
KEG commented:

If Apple is making chips they are certainly competing with the IBM micro electronic division. If the guy signed an agreement not to work for a competitor, he should stand by his agreement. If IBM let him go, that is a different story.


November 5, 2008
In response to: Does Apple's latest hire signal more chip making in future?
Just Another Engineer commented:

Well, these are large companies with very large legal departments. Justice for money has typically been the American way. A person will hardly have the resources to combat a full assault by IBM's lawyers, but the article didn't make it clear whether Apple will assist him. Companies may have the right to protect their IP, but patents, trademarks and other techniques are a better solution. I say this because, like many of the posters here, I have seen personally that non-comptetes are mainly used as a threat to retain every-day engineers in the face of policies that include no COL increases and deteriorating work conditions. While the employees technically have the right to move on, realistically they cannot because having a suit filed will financially ruin the employee during the job transition while hardly inconveniencing the company.


November 4, 2008
In response to: Does Apple's latest hire signal more chip making in future?
Bruce Stenman commented:

IBM knows fully well as does Apple that under California law an employee cannot be prevented from leaving and going to work for another employer. It is really what makes Silicon Valley valuable - the continuing cross pollination of ideas. Apple is more likely to want the blade expertise, as Apple has gained significant market share with its OS X servers that utilze, like IBM''''s servers, Intel processors. The ability to develop servers that better support the next generation of Intel processors and provide better support for virtualization are most likely where Apple is headed and why it wants this individual on board.


November 4, 2008
In response to: Does Apple's latest hire signal more chip making in future?
Bill commented:

Didn't this country fight a nasty little war circa 1860 to determine the right of people to choose for whom they will work?


November 4, 2008
In response to: Does Apple's latest hire signal more chip making in future?
jsandler commented:

Most of you will not remember the internal Apple CPU development activity on Aquarious CPU chips in the pre Power PC era with Motorola and IBM. At that time Apple was going full steam ahead with a 32/64 bit CPU that would have be sourced at the old AT&T fab. Good old Jean Louis Gassee sold the company jewels to get cheaper 68030 chips sets and then future 68040 chips at a discount price by agreeing to scrap the internal CPU chip development - sold off two CRAY computers and canned the entire development team as well. The Apple development was also going to use the "Pink" SW platform that the agreements with IBM for a new joint "non-Windows" environment would up never going anywhere - thank your IBM ! So what goes aroung comes around - the Apple CPU project was always Steve's goal to be able to make superior products and not be a me too company - bye bye Intel! Those were the fun days at Apple !


November 4, 2008
In response to: Does Apple's latest hire signal more chip making in future?
the other Joe (not the plumber) commented:

Employees don't just learn from a company, they also contribute. Non-compete agreements were intended to protect investments by companies in their staff and the sharing of confidential information includings strategic plans. However, many companies are abusing non-compete agreement and this is often done by pathetic excuses for managers, often with some personal agenda influence. Furthermore, with most large coporations having such broad portfolio, the non-compete has to be specific in what is/isn't in play and not open to free interpretation by individuals within the company, lawyers, etc... Else, anybody that worked for GE, IBM, 3M or any other large, higly diversified corporation can never work anywhere else.


November 4, 2008
In response to: Does Apple's latest hire signal more chip making in future?
Santhoff commented:

If the employee knew at that time he accepted employment that a non-compete was required for employment nobody forced him to take the position. Why should someone be able to go into a company learn as much about the companies confidential information and then leave and take that accumulated information to a competitor? Particularly when that engineer was compensated maybe 150K per year and the Intellectual Property that the employee bound by the NDA having access to the work product of dozens or even hundreds of engineers walks out the door to a competitor with potential millions of dollars of work product. Bottom line, if you can''t live with the non-compete, don''t take the job.


November 4, 2008
In response to: Does Apple's latest hire signal more chip making in future?
Also Fed Up commented:

It's high time the emplyee got some leeway in their choice of employ. These non-compete clauses were put there not to punish anyone except the employee who was for what ever reasons digruntled, mishandled, or otherwise cast off in their current positions. Having been there before, I know exactly how this can keep someone from an otherwise good opportunity.


November 4, 2008
In response to: Does Apple's latest hire signal more chip making in future?
tamza commented:

dont know which state employment law is applicable. In any case IF IBM has pre-compensated the engineer so that he 'voluntarily' signed the non-compete they DO HAVE the right to enjoin him; he will not be 'out on the street' for the year; and his knowledge about IBM strategy will ONLY be 12 months old, but still older .. so that Apple cannot benefit from that knowledge. I say IBM DOES have the right to restrain, and hope they win. (I am NOT an IBM person, and have nothing to gain from this action.)


November 4, 2008
In response to: Does Apple's latest hire signal more chip making in future?
Anonymus commented:

Interesting. At first I thought it was pure speculation, but when you mention Apple is hiring CPU engineers it appears to be a possibility. They say you can see a companies future direction from the job postings on its website. I guess time will tell....


November 4, 2008
In response to: Does Apple's latest hire signal more chip making in future?
Fariad commented:

Yes. IBM has no right to law suit. IBM need to learn how to better take of its engineer. Good for Apple and goog for paper master. I think IBM will lose


November 4, 2008
In response to: Does Apple's latest hire signal more chip making in future?
Industry Employee commented:

One year non-compete clauses should not be allowed because it imposes unrealistic restrictions to employees that blocks the employee's choice of employer and potential ability to make a living.

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