Apple is getting into the chips business with the purchase of PA Semi, according to a report.
The Cupertino, California, company on Tuesday told Forbes.com that it had agreed to acquire the 150-person chip designer based in Santa Clara, California.
Formed in 2003, PA Semi is venture backed by Highland Capital Partners, Bessemer Venture Partners, and Venrock Associates.
PA Semi's chips would be used for iPhone and possibly iPods. The move could deal a stinging blow to Intel, which has pushed its Atom line of low-power chips.
In late trading, Intel shares climbed $0.40, or 1.8 percent, at $22.39; Apple shares climbed $2.33, or 1.5 percent, at $162.50.
The Mac maker paid $278 million in cash for the maker of chips, according to the report that cites a person familiar with the deal.
Apple representatives were unavailable for comment. The company reports earnings after the bell Tuesday.
PA Semi is a Red Herring 100 North America 2007 finalist.