The news says ARM is developing and manufacturing chips! Or become a competitor to Qualcomm and MediaTek

Source: Sina Technology

    On the afternoon of April 23rd, it was reported that ARM, a chip design company under Softbank Group, is developing its own semiconductor products (chips) to demonstrate its product manufacturing capabilities. Later this year, ARM will conduct an IPO (initial public offering) on NASDAQ. Therefore, the company is currently trying to attract new users to drive performance growth.

    Several insiders have stated that ARM will collaborate with manufacturing partners to develop this new semiconductor product. This is also the most sincere chip manufacturing effort that ARM has ever made. This move comes as SoftBank actively promotes ARM profits in order to attract more investors in its IPO later this year.

    Previously, ARM mainly sold the blueprint design of chips to chip manufacturers, rather than directly participating in the development and production of semiconductors themselves. The purpose of this move is to showcase the power and capability of its chip design to the wider market. Although ARM has previously manufactured some test chips with partners such as Samsung and TSMC, its main purpose is to familiarize software developers with the new products.

    But this time it‘s different. Several industry executives have told the media that ARM‘s actions began about six months ago and are more sincere than ever before. These insiders stated that ARM has also formed a larger team to carry out this work and positioned the product‘s target customers as chip manufacturers rather than software developers.

    Insiders have stated that ARM has formed a new "solution engineering" team to lead the development of these prototype chips. These chips will mainly be used for mobile devices, laptops, and other electronic products. The ‘Solution Engineering‘ team is led by Kevin Kechichian, a senior figure in the chip industry. Kochkane joined ARM‘s top management team in February of this year, having previously worked at chip manufacturers NXP Semiconductor and Qualcomm, responsible for the development of Qualcomm‘s flagship chip "Snapdragon" processors.

    In addition to developing chips, the "Solution Engineering" team will also expand ARM‘s existing business efforts, enhance design performance and security, and enhance developer access to its products.

    ARM‘s move to manufacture chips has raised concerns in the semiconductor industry. Some industry insiders are concerned that if ARM produces chips that are excellent enough, they may sell them in the market in the future, becoming competitors to some of its largest customers, such as MediaTek or Qualcomm.

    According to people close to ARM, ARM currently has no plans to sell or license these products. Moreover, these product manufacturers are in the prototype stage. ARM declined to comment on this.

    Obviously, any move related to the manufacturing and widespread sale of chips will weaken ARM‘s position as a "neutral country" in the semiconductor industry. Currently, ARM sells its designs to almost all mobile device chip manufacturers instead of directly competing with them. This neutral model has enabled ARM‘s products to capture over 95% of smartphones, with customers including Qualcomm, MediaTek, and Apple.

    A former executive of ARM said, "Engaging in intellectual property work (licensing) is one thing, but truly designing and producing these efforts into physical chips is a completely different matter. The latter is more capital intensive. At some point in the future, ARM will definitely need to speak in terms of returns to prove that such a large-scale investment is reasonable

    ARM has recently taken a series of new measures to showcase its potential to potential investors before its IPO. Last month, it was reported that ARM plans to adjust its business model to increase the price of its chip design, hoping to increase the company‘s revenue before this year‘s IPO.

    According to insiders, ARM plans to no longer charge chip manufacturers usage fees based on the value of the chips, but instead charge device manufacturers usage fees based on the value of the devices. This means that ARM will earn several times more than before for each chip design sold, as the average price of smartphones is much more expensive than chips.

    Last week, ARM acknowledged in its annual report that one of the main risks its business faces is excessive customer concentration. Last year, ARM‘s top 20 customers contributed 86% of revenue, so the loss of a few key customers may have a significant impact on its performance growth. This warning comes as ARM is embroiled in a fierce legal dispute with one of its largest clients, Qualcomm. Previously, ARM accused Qualcomm of using some of its designs without obtaining the necessary licenses.

    For ARM chip production, Brady Wang, an analyst at Counterpoint Research, a research firm, said: Google believes that it can develop the best Android operating system, so it decided to manufacture Pixel phones. Microsoft believes that Windows dominates the operating system market, so it makes Surface laptops. Therefore, ARM naturally believes that it can manufacture first-class chips based on its own design. However, in fact, manufacturing chips is far more challenging than manufacturing products such as phones and laptops. It requires generations of development Work hard