IBM is suing Papermaster and Apple over the terms of his noncompete agreement. Apple and IBM hardly compete, which makes IBM's lawsuit a bit puzzling. California law is unfriendly, in general, to noncompete agreements; if anything comes of the lawsuit, it will likely be some kind of settlement. Here's why I think IBM is suing Apple and Papermaster: It just wants to get some idea of what Apple's up to.

We've been focused too much on software and content, even though we know there's someone from SanDisk who just flipped their lid on the playa. Likewise, there must be some poor pacifist at PA Semi who, all too happy to get sold to Apple, learned they had to continue engineering chip fab designs for jets, subs and choppers. I mean, c'mon, AMD minions, can you come up with no good dirt on Intel executives? I yearn to hear the stories from the actual front lines of technology, and not from the front of the line at the British Bankers Club or 111 Minna. Do tell. (Photo by Marcin Wichary)

When Apple bought PA Semi in the spring, we thought Steve Jobs was looking for leverage in his negotiations with Intel for more custom designs. If Apple really is going to go back to designing its own motherboards — as it did before the Intel switch — then Intel may have called Jobs's bluff. Not that that's a bad thing for PA Semi's designers — working on Mac circuitry seems more appealing than tending to Pentagon contracts, as they were doing before.

(Intel Outside image via Loren Petrich)

Beyond vertically integrating yet another step in the process of making the popular devices, it would also keep the technology out of the hands of competitors, like the Samsung multitouch phone that looks strikingly similar to Jobs's pet project, and allow the company to keep an even tighter lid on leaks. The only thing Apple still won't do is fabricate the chips and assemble the devices, so while the boxes will still read "Designed by Apple in California," the devices inside will very much be "Assembled in China." (Photo by Chen Zhao)

"We've had customers saying they are going to the DoD on this one," said a source in one of the several companies making embedded computer boards with the processor.

Likely not. Expect to read lots of gadget-press slavering over PA Semi's speeds and feeds, and debate over its chips' suitability for an iPhone. That may well have nothing to do with why Apple bought the company.

PA Semi's prize is its founder, Dan Dobberpuhl, a famed chip designer, and his 150-person staff. At less than $2 million per engineer, the price Apple paid is in the range Cisco pays to snap up talented engineers. With them working at Apple, Jobs can push established chipmakers to adopt its technical innovations and perhaps swap licenses for intellectual property. That's far more likely than actually switching away from Intel chips for the Mac; Apple actually explored using PA Semi's chips before choosing Intel. Even the iPhone, which would benefit more from PA Semi's low-power chips, is an unlikely candidate for an all-new chip design.

Why? Volume economics favor Intel and Samsung so strongly that it's hard to imagine that a new microprocessor design from the PA Semi team could replace their wares. $278 million doesn't buy Jobs a rival chip; it buys him a tool to chip away at his suppliers' prices.