I'm not sure I buy Arm's argument. It is hard to describe the degree to which policymakers in China [0][1], India [2][3][4], and South Korea [5] are all heavily promoting RISC-V in order to reduce vendor dependency as well as build their own competitive and domestic design ecosystems.
Additionally, a significant portion of Arm's China, US, and India engineering and product leadership has left to work on RISC-V startups and companies now.
That said, I can see Arm being leveraged by other Softbank owned companies like Ampere (which they already do) and Graphcore, with an eventual merger of all 3 into some form of a mega-corp due to operational overlaps and efficiencies, but this would be defensive in nature given the degree to which the industry has aligned with funding a RISC-V ecosystem and how RISC-V's governance and leadership consists of major players and leaders in the chip design space.
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Edit: Can't reply
> It is also a bad look when they sue Qualcomm for selling chips in a way that Arm does not like.
That's why Qualcomm is also betting on RISC-V as well after acquiring Ventana [6] and is participating in India's DeepTech initiative [7], which has been targeting RISC-V startups as well as Renesas [8] in Japan+India taping out a 3nm RISC-V processor for automotive and IoT usecases. And also why FuriosaAI in SK has been working on RISC-V, as well as the multitude of fabless players in China.
It's the same thing that happened with IBM POWER vs x86 decades ago with an added sovereignty component.
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Edit 2: After thinking some more, I think a case could be made for Arm to survive but not thrive in the same manner as Minitel continued to kick around for so long due to France's stress on technological sovereignty. Long term, I think RISC-V will eat a large portion of Arm's commodity and embedded computing market share, but Arm (and moreso Softbank) is attempting to position itself as critical to British [9], Malaysian [10] (they remain a major semiconductor hub), and even Indian [11] attempts at design sovereignty.
I can see a British-Japanese alignment around eventually merging Softbank properties like Arm, Graphcore, Ampere, and Rapidus into a British-Japanese version of Intel such that Graphcore+Ampere leverage Arm's ISA for HPC and Embedded/Telecom usecases respectively and Rapidus becomes their foundry.
Additionally, I can see the Japanese government pushing it's players to heavily leverage Arm as well - especially given that all the major players in Japan already cooperate, have an ownership stake in, or are partially owned by Softbank.
ARM is an incompatible pile of mess. On an (X86) PC you can tranfer your disk, as it is, to a new X86 architecture and it will run.
On ARM, every processor has its own bootloader, blobs needed for initialisation. Even the systems have different architecture.
In the end, you need a special software setup, which is not supported more than a few years. See phones, Raspberry PIs and derivatives, Chromebooks.
This feels like a religious belief. Somehow everyone captures exactly the value they create - no more, and no less. Amazing how perfect every transaction must be to ensure this is always true.
The value of ARM is that it's a cheap commodity that you can license instead of reinvent. That's why there is a range of chip makers that now produce ARM chips instead of or in addition to their own designs. Other chip designs are available. Risc V is getting some traction. It will take a long time for that to catch up with ARM but of course if ARM raises their pricing that might provide an incentive to speed up development.
What do you mean by "IPR focussed design"? IPR = Intellectial Property Rights? So they should keep making designs but not compete with their customers?
If ARM wanted a bigger cut then they should have been fabricating their designs years ago instead of licensing their IP. They would have owned the Android SoC market.
Good. It’s always insane to me that they get 1% of the iPhone CPU cost of ~$68 or something there around.
There was a lawsuit in 2020 or 2021 where some evidence was unsealed showing ARM gets 1% of the CPU cost. I can’t recall how that CPU cost was calculated - but I believe that was a part of their deal through the early 30’s. That’s less than a dollar per iPhone.
RISC-V could completely eat ARM for lunch if they try to jack up fees under the guise of "value extraction", and not through true value creation.
In 2 years from this date, I fully expect the safety critical RISC-V chips like the forthcoming High Performance Spaceflight Computer (HPSC) from Microchip, Inc.[0], and derivatives [1] [2] leveraging SiFive IP[3], and other RISC-V competitors [4] to take a dominant position in Space, Aerospace, Aviation, and potentially other less cost-sensitive industries where RTOS dominate.
This raises a few questions in my mind:
Could that extend to vehicles and other use-cases?
Will we see more derivatives with even higher performance beyond the already announced PolarFire2 designed specifically for terrestrial use?
I don't know how sensitive their overall BOMs are to high priced reliable chips designed for fault tolerance...
I don't know how fast the quality of the mass market chinese RISC-V chips will ascend the perceived quality gap, and expand offerings into newer profiles [5]
Where will the toolchain for RISC-V be on a specific chip basis?
Arm's biggest customers are also their biggest competitors. Apple and Qualcomm use their ISA license instead of their Core architecture license. ISA license pays a much smaller royalty fee.
Now that Apple and Qualcomm both design their own custom cores, Arm's custom core license business is suffering. The only other company that license their custom cores for phones is Mediatek. Arm still has hyperscalers in Google, AWS, Microsoft, and Meta for server core licenses though. But that might not last as long since everyone wants to differentiate and design their own cores. Apple and Qualcomm are succeeding in designing better custom cores than original Arm cores.
So Arm's business model has to change if they want to survive.
Either they make ISA license fees much higher (risk losing customers to RISCV) or they make their own CPUs and compete against their own customers even more.
I enjoy analyzing chip companies and businesses. I've never invested in Arm's stock because their customers are also their competitors. Ultimately, the questions for Arm investors are:
1. Do you believe they can design better cores than Apple and Qualcomm (and other big tech)?
2. Do you think that the threat of companies moving to RISC-V is real if Arm raises ISA royalties?
> Either they make ISA license fees much higher (risk losing customers to RISCV)
If ARM goes down this path, it'll be a classic “innovator's dilemma” cycle leading to disruption.
ARM is clearly the superior incumbent technology, with a vast software base, billions of devices, extremely optimized designs, and huge amounts of engineering experience at the companies that use it; RISC-V is less capable on all counts.
And yet RISC-V is likely to eat ARM's lunch gradually—and then rapidly—over the next decade or so, due to being cheaper to build new cores on.
>1. Do you believe they can design better cores than Apple and Qualcomm (and other big tech)?
Define better. Because ARM is delivering better CPU Core and Value through their C1 and C2 without having its customer setting up its own R&D on CPU design. Not to mention the GPU and other IPs that comes with it.
> But that might not last as long since everyone wants to differentiate and design their own cores.
That is easier said than done. Had that been the case, the largest Hyperscaler of all, Amazon would have had their own CPU core on Graviton. Designing CPU Core is one thing, making them and integrating them properly to suit their own workload is an entirely separate effort.
>So Arm's business model has to change if they want to survive.
They can continue to do what they are doing today to survive perfectly fine. I assume you want change because you want them to grow.
Also, ARM's business model isn't just on Smartphone. There are billions of places if not trillions of places where ARM core exist.
Not with this compatibility mess. I would trust ARM for a server/pc system, the day I can boot standard Debian Aarch64 image on them. Until then x86 it is.
90% of the stock is owned by Masa who used it for collateral for his 18 billion loan for Stargate. THat is against 33 banks who have a strong incentivise to dump in a margin call situation.
Their revenues are circular for the last 4 years, with 30% growth purely coming from Softbank shuffling their own money.
They are gonna be the canary in the coal mine for when the AI bubble implodes.
30 comments
[ 0.19 ms ] story [ 44.0 ms ] threadAdditionally, a significant portion of Arm's China, US, and India engineering and product leadership has left to work on RISC-V startups and companies now.
That said, I can see Arm being leveraged by other Softbank owned companies like Ampere (which they already do) and Graphcore, with an eventual merger of all 3 into some form of a mega-corp due to operational overlaps and efficiencies, but this would be defensive in nature given the degree to which the industry has aligned with funding a RISC-V ecosystem and how RISC-V's governance and leadership consists of major players and leaders in the chip design space.
---
Edit: Can't reply
> It is also a bad look when they sue Qualcomm for selling chips in a way that Arm does not like.
That's why Qualcomm is also betting on RISC-V as well after acquiring Ventana [6] and is participating in India's DeepTech initiative [7], which has been targeting RISC-V startups as well as Renesas [8] in Japan+India taping out a 3nm RISC-V processor for automotive and IoT usecases. And also why FuriosaAI in SK has been working on RISC-V, as well as the multitude of fabless players in China.
It's the same thing that happened with IBM POWER vs x86 decades ago with an added sovereignty component.
---
Edit 2: After thinking some more, I think a case could be made for Arm to survive but not thrive in the same manner as Minitel continued to kick around for so long due to France's stress on technological sovereignty. Long term, I think RISC-V will eat a large portion of Arm's commodity and embedded computing market share, but Arm (and moreso Softbank) is attempting to position itself as critical to British [9], Malaysian [10] (they remain a major semiconductor hub), and even Indian [11] attempts at design sovereignty.
I can see a British-Japanese alignment around eventually merging Softbank properties like Arm, Graphcore, Ampere, and Rapidus into a British-Japanese version of Intel such that Graphcore+Ampere leverage Arm's ISA for HPC and Embedded/Telecom usecases respectively and Rapidus becomes their foundry.
Additionally, I can see the Japanese government pushing it's players to heavily leverage Arm as well - especially given that all the major players in Japan already cooperate, have an ownership stake in, or are partially owned by Softbank.
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[0] - https://www.digitimes.com/news/a20260213PD208/arm-risc-v-com...
[1] - https://www.cas.cn/cm/202601/t20260126_5097208.shtml
[2] - https://www.digitimes.com/news/a20260216VL205.html
[3] - https://www.pib.gov.in/PressReleseDetailm.aspx?PRID=2224839&...
[4] - https://www.pib.gov.in/PressReleasePage.aspx?PRID=1820621&re...
[5] - https://m.blog.naver.com/nanambook/223316051806
[6] - https:/...
Not all ARM use cases need that, but it would be a huge mistake to not develop integrated options.
And also an opportunity to make adjustments to their business model.
On ARM, every processor has its own bootloader, blobs needed for initialisation. Even the systems have different architecture. In the end, you need a special software setup, which is not supported more than a few years. See phones, Raspberry PIs and derivatives, Chromebooks.
No, they capture exactly the value they create.
As a long time (40 years) subscriber to The Economist, I expect better of them.
Keep on doing IPR focussed design.
Grow deeper roots into a foundry, work on integration of the tech into FPGA and big chip/platter stuff for AI.
If AI tanks, the work will find a value point. We all want more memory and more execution cycles per clock tick be they on one ALU or many.
Lots of work to come in optical related areas. ARM has green fields to dig, beyond the instruction set.
After following that drama, it's difficult to see ARM as anything but a greedy profiteer.
There was a lawsuit in 2020 or 2021 where some evidence was unsealed showing ARM gets 1% of the CPU cost. I can’t recall how that CPU cost was calculated - but I believe that was a part of their deal through the early 30’s. That’s less than a dollar per iPhone.
In 2 years from this date, I fully expect the safety critical RISC-V chips like the forthcoming High Performance Spaceflight Computer (HPSC) from Microchip, Inc.[0], and derivatives [1] [2] leveraging SiFive IP[3], and other RISC-V competitors [4] to take a dominant position in Space, Aerospace, Aviation, and potentially other less cost-sensitive industries where RTOS dominate.
This raises a few questions in my mind:
Could that extend to vehicles and other use-cases?
Will we see more derivatives with even higher performance beyond the already announced PolarFire2 designed specifically for terrestrial use?
I don't know how sensitive their overall BOMs are to high priced reliable chips designed for fault tolerance...
I don't know how fast the quality of the mass market chinese RISC-V chips will ascend the perceived quality gap, and expand offerings into newer profiles [5]
Where will the toolchain for RISC-V be on a specific chip basis?
Is Nvidia likely to expand their usage of RISC-V?
[0] https://www.microchip.com/en-us/products/microprocessors/64-...
[1] https://www.microchip.com/en-us/products/microprocessors/64-...
[2] https://www.microchip.com/en-us/products/microprocessors/64-...
[3] https://www.sifive.com/
[4] https://www.gaisler.com/products/gr765
[5] https://docs.riscv.org/reference/profiles/rva23/_attachments...
Now that Apple and Qualcomm both design their own custom cores, Arm's custom core license business is suffering. The only other company that license their custom cores for phones is Mediatek. Arm still has hyperscalers in Google, AWS, Microsoft, and Meta for server core licenses though. But that might not last as long since everyone wants to differentiate and design their own cores. Apple and Qualcomm are succeeding in designing better custom cores than original Arm cores.
So Arm's business model has to change if they want to survive.
Either they make ISA license fees much higher (risk losing customers to RISCV) or they make their own CPUs and compete against their own customers even more.
I enjoy analyzing chip companies and businesses. I've never invested in Arm's stock because their customers are also their competitors. Ultimately, the questions for Arm investors are:
1. Do you believe they can design better cores than Apple and Qualcomm (and other big tech)?
2. Do you think that the threat of companies moving to RISC-V is real if Arm raises ISA royalties?
If ARM goes down this path, it'll be a classic “innovator's dilemma” cycle leading to disruption.
ARM is clearly the superior incumbent technology, with a vast software base, billions of devices, extremely optimized designs, and huge amounts of engineering experience at the companies that use it; RISC-V is less capable on all counts.
And yet RISC-V is likely to eat ARM's lunch gradually—and then rapidly—over the next decade or so, due to being cheaper to build new cores on.
Define better. Because ARM is delivering better CPU Core and Value through their C1 and C2 without having its customer setting up its own R&D on CPU design. Not to mention the GPU and other IPs that comes with it.
> But that might not last as long since everyone wants to differentiate and design their own cores.
That is easier said than done. Had that been the case, the largest Hyperscaler of all, Amazon would have had their own CPU core on Graviton. Designing CPU Core is one thing, making them and integrating them properly to suit their own workload is an entirely separate effort.
>So Arm's business model has to change if they want to survive.
They can continue to do what they are doing today to survive perfectly fine. I assume you want change because you want them to grow.
Also, ARM's business model isn't just on Smartphone. There are billions of places if not trillions of places where ARM core exist.
IP-locked ISA is something nobody sane would want.
10% of the stock is floated.
90% of the stock is owned by Masa who used it for collateral for his 18 billion loan for Stargate. THat is against 33 banks who have a strong incentivise to dump in a margin call situation.
Their revenues are circular for the last 4 years, with 30% growth purely coming from Softbank shuffling their own money.
They are gonna be the canary in the coal mine for when the AI bubble implodes.