Wearables and payments: What Apple might get from its Passif Semi purchase
Apple [AAPL] has acquired small semiconductor company, Passif Semiconductor — reading that company's published patents suggests Cupertino may be looking to use Passif's technologies in future wearable and contactless payment solutions.
Context & Ripple Effects
Apple has been building semiconductor capability through acquisitions, including a 2008 purchase of a chip designer, while its 2011 purchase of more than 200 Freescale patents extended its control over relevant intellectual property. Passif adds a small specialist asset to that established approach.
The significance is less an announced product than Apple bringing the company and its patent portfolio inside its own development organization, where the cited wearable and contactless-payment applications can be evaluated alongside its device plans.
First-order effects
- Apple gains control of Passif Semiconductor’s engineering capability and published patents rather than relying on the company as an outside supplier or partner.
- Passif’s technology becomes an internal option for Apple’s prospective wearable and contactless-payment product work; no product commitment is disclosed.
Second-order effects
- The purchase reinforces Apple’s preference for owning specialized chip and IP assets, raising the value of small semiconductor specialists that can address device-specific functions.
- External component vendors seeking roles in Apple’s wearable or payment-related designs face a buyer that is expanding its ability to develop key technology internally.
Third-order effects
- If Apple continues pairing chip-team acquisitions with patent purchases, product differentiation in emerging device categories will depend increasingly on proprietary silicon and controlled intellectual property rather than interchangeable components.
The trend: Apple is using targeted semiconductor and patent acquisitions to internalize capabilities that may differentiate future device categories.