Apple acquisitions are fuelling the growth of its semiconductor patent portfolio

Over the past decade-and-a-half, Apple has expanded its semiconductor patent portfolio, as well as the number of inventors it has working in the field, significantly broadening its position in the semiconductor patent landscape.

Background

In November 2020 Apple launched the M1 Systems-On-Chip (SoC) for use in its desktop and laptop computers, thereby moving away from central processing unit and graphics processing unit (GPU) chips supplied by others in the industry. The M1 followed a progression of increasingly capable processors designed by Apple, starting with the A4 chip as the central processor for the iPad and iPhone 4 in 2010.

As a long-time vendor of personal computers and then mobile devices, Apple has a history of working with processors from multiple suppliers including IBM, Freescale and Intel. Also, Apple worked with VLSI Technology and Acorn Computer in 1990 to help create Advanced RISC Machines. However, in the last couple of decades, Apple has significantly increased its own semiconductor design resources. Analysis of Apple’s acquisition background and semiconductor-related patent portfolio showcases elements of this development.

Apple's patent acquisition history

Apple has a history of acquiring patents. According to assignment records, it was assigned over 1,700 US patent assets (grants and applications) in 2012 from Rockstar Bidco LP, the consortium that acquired Nortel Networks’ patent portfolio. In 2013, Apple acquired approximately 400 US patent assets from Eastman Kodak Company. Since 2012, records show that Apple has acquired approximately 9,000 US patent assets, including from companies such as Panasonic, NEC, Samsung Electronics, HP Inc, AT&T, Denso, Energizer and LG Display. Figure 1 highlights the number of US patent assets acquired by Apple between 2012 and 2021.

The broad scope of Apple’s interests is indicated by the range of industries represented by the patent sellers: telecommunications (Nortel), imaging (Kodak), computers (HP), energy storage (Energizer) and displays (LG Display). During this period, Apple also made multiple acquisitions of patent assets originating from semiconductor vendors such as NXP, STMicroelectronics, Renesas and Microchip.

Acquisitions of semiconductor businesses

Many of the transactions shown in Figure 1 appear to be ‘bare patent’ acquisitions: transactions focused on patent assets only. Apple has also received large patent portfolios in the course of acquiring semiconductor companies and business units. One prominent deal from 2019 was its acquisition of the majority of Intel’s smartphone modem business, after which over 3,000 US patent assets were assigned to Apple from Intel, as indicated by the “2020” bar in Figure 1.

A large number of those patents related to wireless communications and had originally been associated with Infineon (Intel acquired Infineon’s Wireless Solutions Business in 2011). However, the assignment also included patents related to computer architecture, semiconductor memory, graphics processing and other semiconductor technologies. This acquisition is just one of a long string of Apple acquisitions in the semiconductor space.

Records indicate that Apple acquired a total of approximately 150 granted US patents directly from acquisition of these entities. An additional approximately 330 US patents were granted after acquisition based on applications from inventors working in the acquired units, with priority dates preceding the acquisition. Further, approximately 580 US patents were granted on top of that to inventors associated with the acquired units having priority dates after the corporate acquisition. This record indicates that Apple not only improved its patent position, but also continued the prosecution of innovations with priority before the acquisition and generated further applications with inventors from the acquired entities.

Inventors associated with acquired entities are highly represented in Apple’s patent portfolio for certain semiconductor fields. For example, it includes approximately 360 US granted patents with a Cooperative Patent Classification (CPC) code of G11C, associated with semiconductor static stores (including technologies such as flash memory devices). Of that set, approximately 200 are associated with inventors from acquired entities including Annobit, PA Semiconductor and others.

Apple has also expanded its semiconductor capability with organic hires, prompting articles about its “war for chip talent” and activities “aggressively poaching IBM’s chip designers”. However, Apple has been selective in its focus for semiconductor innovation. Operating as a fabless designer, the company has a smaller set of patents addressing semiconductor fabrication versus data processing – it has over 10 times as many patents with the CPC code G06F (data processing including semiconductor designs) versus H01L (semiconductor fabrication and general semiconductors). Despite this, Apple’s patents remain less concentrated in terms of semiconductor innovation than more established innovators like Intel and Micron. Thus, even after the 2020 transfer of approximately 3,000 patent assets to Apple, Intel continued to hold a larger portfolio of semiconductor-related patents, measured by the count of G06F and H01L patents. The assignment represented only approximately 5% of Intel’s granted patents at the time and it continued to retain a significant portfolio, including patents addressing wireless technologies as well as semiconductor-specific and device-level patents.

Apple has shown that it will use technology from other leading innovators in Apple products, typically, at first, through a supply contract for chips or other key components. However, the company’s acquisitions and hires have enabled the company to internally source key chips and other components for its devices. In the process, Apple has designed out products from traditional semiconductor vendors; companies like Toshiba and Samsung for memory controllers, Imagination Technologies for GPUs and Intel for SoCs. Apple was recently reported to be planning to replace Broadcom wireless communications chips and Qualcomm cellular modem chips with in-house designs by 2024 or 2025. Based on such developments, Apple was ranked as the 11th largest semiconductor vendor in terms of revenue in 2021, ahead of traditional vendors such as Infineon, STMicroelectronics, NXP and Renesas.

In an analogous development, Apple has also been growing its display technology capabilities, seen through its 2014 acquisition of LuxVue, for example, a start-up focused on micro-LED technology. Recent news indicates that by 2024, Apple may start using its own micro-LED display products for its highest-end Apple Watches, designing out displays previously supplied by vendors like Samsung and LG.

Ongoing developments

Apple continues to expand its resources and capabilities in the semiconductor space. The company launched the M2 chip in June 2022 (about a year-and-a-half after the original M1) and it has filed roughly 1,000 patents per year with CPC class G06F in a decade. Other major high-tech enterprises have also entered this market, though not to the same extent. In 2010, Alphabet acquired chip maker Agnilux (started by former PA Semi employees) and in 2021, it introduced its Tensor SoC on the Pixel 6 smartphone. Meanwhile, Amazon acquired microelectronics company Annapurna Labs in 2015 and now uses the unit to design chips for Amazon Web Services.

As competition in the high-tech industry continues to evolve, major vendors will continue to develop their capabilities in the semiconductor space. In this environment, the high level of activity in semiconductor patent prosecution and transactions can also be expected to continue.