This information was discovered on Lien's Linked In profile and first published on the New York Times Blog.
Apple acquired chip start-up PA Semiconductor in April for close to $300 million. Shortly after Steve Job's announced that the company would be used to develop iPhone and iPod processors; however, which kind of processor was unknown.
By developing its own ARM variant, Apple could create a processor that meets the specific needs of the iPhone and iPod, building support for functions such as the touch screen or scroll wheel into silicon and possibly savings on costs by reducing the number of processors needed in each device. In addition, Apple will be able to maintain tighter controls on who knows what about its future products by disposing of an outside chip supplier.
They could put software accelerators on there or maybe do something like a graphics engine, said Fred Weber, the former chief technology officer of Advanced Micro Devices and current chief executive of memory specialist Metaram.