Apple has been on a Silicon Valley hiring spree, wooing semiconductor heavy hitters. Apple appears to be focused on engineers who could develop multifunction chips used in smartphones to run software and do other tasks.

Bringing chipmaking capabilities in-house could give Apple yet another innovation edge to custom-design chips that accomplish goals like lower power consumption, better graphics quality, and high-definition video, according to The Wall Street Journal.

Meet the Team

Some of Apple's recent hires include Raja Koduri, formerly CTO of AMD 's graphics-products group. Koduri officially started punching the clock at Apple this week. Bob Drebin, another former CTO at AMD, is also on Apple's side of the technology fence.

If that's not evidence enough that Apple is moving toward producing chips in-house, consider the flurry of online job postings. There are dozens of job openings at Apple for engineers and others who can develop new chips. Beyond innovation, the tight-lipped Apple could be trying to keep its plans for new products closer to CEO Steve Job's black turtleneck by cutting third-party chipmakers out of the process.

About this time last year, Apple bought P.A. Semi, a boutique microprocessor design company, in a deal worth $278 million. The firm was led by chip-industry veteran Dan Dobberpuhl and best known for its PWRfiecient processors for the multibillion-dollar high-performance embedded computing markets. At that time, analysts speculated that P.A. Semi's processors could provide advanced features in future iPods and iPhones.

"P.A. Semi was an early significant player in the embedded-chips space. This would be particularly applicable for next-generation smartphones, handheld devices, and highly mobile computing devices," said Charles King, principal analyst at Pund-IT. "As that market evolves, it could be very logical for Apple to lock in its intellectual property by creating a proprietary chipset rather than relying on an industry-standard chipset or chips from Intel ."

Competing with Android

With T-Mobile selling its one millionth Android-powered G1 phone last week, King said the smart money seems to be on a growing preponderance of increasingly powerful, highly mobile, even handheld, computing devices. Although the iPhone was revolutionary when it first came to market, the demand for touchscreen platforms is blossoming and attracting more handset makers to push out iPhone-like devices. That leads Apple to a new challenge: Differentiating itself from the competition. Advanced features made possible by proprietary chips are one answer.

"By definition, the P.A. Semi acquisition probably brought Apple a lot of intellectual property and existing technology to work with. But new chip development is fraught with a lot of complexities and potential problems," King said. "This is a situation where Apple has a lot of cash on hand, they are assembling a brain trust, and if they decide to go into this, I expect they will do well. But it's not a sure thing. It will be interesting to see how this all plays out."