Oracle looks for chipmakers...will MSFT and GOOG look too?

There's a trend building for proprietary chip technologies as a further barrier to competition. How far will that trend go?
Written by Tom Foremski, Contributor

Back in January I wrote about Apple's A4 microprocessor, the result of its acquisition of PA Semi, more than 2 years ago, for $278 million. At the time I asked where is MSFT and GOOG's custom chip projects? [The Mysterious Apple A4 Chip - Where's MSFT's and GOOG's Chip?]

Now Oracle says it is looking to acquire chip companies too.

The San Francisco Chronicle reports: Oracle looks for chipmakers to acquire

"You're going to see us buying chip companies," Ellison said this week at Oracle's annual meeting in San Francisco. Acquiring chipmakers would extend Oracle's push into computer hardware, initiated in January with its purchase of Sun Microsystems Inc., a server manufacturer.

Ellison said he wants to follow the approach of Apple Inc. CEO Steve Jobs by owning more of the intellectual property that underpins computer chips.

...Oracle may buy a semiconductor company with technology for servers, said Doug Freedman, an analyst at Gleacher & Co. in San Francisco. Potential targets include AMD, IBM Corp.'s chip division and Nvidia Corp., he said.

Building custom chips provides several advantages. A company can embed proprietary technologies that gives its systems key advantages and make it difficult for rivals to copy.

General purpose chips such as those available from Intel, the world's largest chipmaker, offer powerful computing performance but because those chips are available to anyone, it encourages "me-too" competitors.

Custom chips provide an additional barrier to competition and the opportunity to charge premium prices and resist commoditization.

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