Google buys Agnilux, eyeing processors by Seth Weintraub @FortuneMagazine April 21, 2010, 4:36 PM EST E-mail Tweet Facebook Google Plus Linkedin Share icons Acquiring the stealth semiconductor firm signals that Google is moving into processor development. But did they buy Agnilux just to build chips for their own servers? Agnilux logo, via agnilux.com Agnilux was founded by members of the PA Semi (originally “Palo Alto Semiconductor”) company that was purchased by Apple for $278 million in April 2008. After the purchase, many of the top employees were reportedly upset at the pricing of the stock options Apple granted to them. They left to form Agnilux, the super secret early stage start-up that Google just grabbed. Last night, PE Hub discovered that Google had made the move and said the company held talks with companies like Cisco, Microsoft and Texas Instruments for a strategic investment before agreeing to being bought by Google (GOOG). The purchase was confirmed by Google last night. Agnilux CEO Amarjeet Gill, COO Mark Hayter, engineers Olof Johansson and Todd Broch all jumped from Apple to start Agnilux shortly after the purchase. Dan Dobberpuhl, the chief executive of PA Semi, was reported to have joined as well. The PA Semi purchase was made by Apple to “to do system-on-chips for iPhones and iPods,” Steve Jobs told the New York Times after the purchase. What Google going to do with this all-star chip team? The PA Semi Alums at Agnilux knows all about Apple’s iPad and upcoming iPhone and its processors. Google, however doesn’t really venture into consumer hardware. (They even contract with Dell to build their search appliances.) HTC, Motorola and other manufacturers build Google’s Android and soon ChromeOS devices. Plus, the PA Semi-turned-Apple engineers likely signed a non-compete agreement when leaving Apple. The agreement is all-but-unenforceable in California, but it is still a factor to consider. Angilux is rumored to make super efficient processors for servers, which fits nicely into Google’s massive data center business. Building chips for its own internal servers seems like a likely first step for Google’s new Agnilux business. The biggest costs in maintaining data centers have to do with the massive energy required by the millions of computer processors, and the power it costs to keep them cool. Even tiny differences in heat and power consumption thanks to Agnilux chips could save Google millions. This isn’t Google’s first move into processor technology. Google purchased PeakStream in 2007. According to internetnews.com, “PeakStream Platform, released in December, helps developers program multi-core chips, graphics processor units (GPUs) and Cell processors to boost application performance.” Agnilux.com is no longer active but it is still available, of course, via Google cache. For linguistics nerds out there, the name Agnilux is derived from agni – Sanskrit for fire and lux – Latin for light. Seems the company had it backwards, given that Google is hoping the chips run cool.