A Historic Confluence of Two Semiconductor Tech Companies

A Historic Confluence of Two Semiconductor Tech Companies

In the early 80s of the last century, computing came out of the hands of geeks and nerds and got democratized. IBM spearheaded the initiative of Personal Computer (PC) with two unruly kids, Microsoft and Intel, with the Operating System (OS) coming from the former and the Central Processing Unit (CPU) coming from the latter. Many clones and compatibles came into being and Personal Computer industry never looked back.

Moors law, i.e. the number of transistors in an Integrated Circuit (IC) doubles every two years; guided the raw computing power of Intel CPU. To match with it, Microsoft went into Graphical User Interface (GUI), with the landmark avatar of its OS, the ‘Windows’.

IT matured to ICT (Information and Communication Technology) where Computer & Communication Technology merged together and the evolution of smart phone today combined the computing power of huge mainframe computers of yesteryears and the satellite phones, not to speak of the ubiquitous Internet anchoring everything through it.

Though Intel & Microsoft, the computer-less computer companies thrived and controlled the PC industry, on the smart phone space, both couldn’t make an impact. The Android and iOS became the de-facto OS standards and many CPU makers came into existence for smart phones. One particular semiconductor technology company chose its own path as the CPU of smart phones and that is M/s. Today A.R.M Holding a processor company, which has more than 250 mobile tech companies including Apple; using its CPU technology.

A.R.M started as a UK based company by the name, Acorn in the 1980s. Unlike Intel Corporation, this semiconductor design company leveraged on the principles of Reduced Instruction Set Computing (RISC). Compared to the powerful Intel CPUs which packed too much of transistors in its real estate, Acorn processors were less powerful  but were very fast with an added advantage of having consuming very little power. This technology gave a paradigm shift in the data processing methodology and its limited power consumption, helped the mobile phones with high longevity of usage. 

After Steve Jobs’ second coming to Apple, the Apple Company combined with Acorn to derive into a new company, Acorn RISC Machine (ARM) Inc., with Apple owning 43% of it. ARM processors gave a shot in the arm for Apple Company too. Initially, it was known as Newton Message Pad, and later iPod, iPad and then iPhone used ARM processors as their CPU. There are wonderful stories of how ARM helped Apple to grow.

The first was in 1999, when Apple sold 15% of ARM stock to get $1.1 Billion at a time when it was financially doing not well, which helps to strengthen the Apple Company. Secondly, Apple decided to do way with Intel processors for its devices in favor of ARM processors, thereby cutting down cost drastically. With ARM CPU, Apple went on to be a technology & innovation leader, skyrocketing its market capital to the Trillion-dollar bracket.

By 2012 A.R.M Holding was bought over by Softbank, a private equity (PE) Company owned by famous Masayoshi Son, thus becoming a Japanese company. ARM’s business model is not into chip manufacturing but designing and selling licenses to others for manufacturing it. The revenue for the year 2020 was $1.5 billion with profits hovering above US$500 million, having assets worth $3.2 Billion. Though more than 20 billion ARM CPUs have been manufactured so far, the company’s revenue looks small in comparison to Intel Corporation because it is not into manufacturing but technology licensing.

On 13th September 2020, NVidia Corporation bought A.R.M Holding from Softbank at a whopping US$40 Billion! NVidia is a globally successful Graphic Processor manufacturer with revenue of $11 Billion and a profit of close to $3 Billion, a mighty one in the semiconductor field.

The coming together of these two innovative semiconductor companies will go a long way into the thriving technology market with devices made with them. There could also be future possibility of the merging of CPU and Graphic Processing Unit into one chip; it may give you a tremendous graphic and video power to mobile devices.

Another market that would strengthen by the coming together of ARM and NVidia will be in the 5G space. It is hoped that 5G technologies will combine with Internet of Things (IOT) and the NVidia/ARM combine can revolutionize the same by powering it.

Let us watch the developments, in days to come.

About the Author

S.R Nair is a serial entrepreneur, author, adjunct professor and a mentor, having chaired several professional and non-governmental organizations in India. He is a known public speaker who provides counsel in areas such as management, entrepreneurship, marketing and technology to several governmental, educational and not for profit organizations.