Post-IPO, Arm to push purpose-built almost-processors
British chip design biz plans to satisfy investors by seeking new customers, while RISC-V and China are already challenges
Comment The Arm that listed on the Nasdaq Thursday is a very different operation to the one Softbank took private in 2016, because the British chip designer has evolved from licensing its architecture and core designs to developing pre-validated almost-complete processor blueprints that offer a swift and cheap route to developing custom silicon.
"Last time we went public, we were very much looked at as a smartphone processor business," Paul Williamson – who leads up Arm's IoT business unit – told The Register earlier today.
"In the time that we've been a privately held business, we've transformed that to address a broader range of markets."
Now that the biz has again gone public it is again accountable to a range of investors who expect strong returns, one way or another.
Arm’s plan to satisfy them, and grow, is the development of what Williamson called "more complete compute solutions."
Why stop at the core? Here, have a whole processor
"The needs of a server look very different to the needs of a low power IoT device, but Arm is positioning itself to ensure we've got the right mix of technologies available tuned to the needs of each market," Williamson said.
"That's definitely a different Arm to what you have seen back in 2016."
Arm built its business on licensing out its instruction set architecture as well as CPU core designs, expanding its portfolio over the years to include all sorts of other building blocks for customers to license and stick into their custom processors and system-on-chips. You can pick up a relatively expensive architectural license from Arm and design your own compatible CPU cores, and/or pick one of its off-the-shelf cores to license, which do not cost as much.
To create functional microprocessors, licensees would need to develop or obtain not just CPU cores but also memory controllers and IO functionality, and depending on the application, GPUs, hardware acceleration, and other bits and pieces, and bring them all together. In the vast majority of cases, licencees would integrate these individual blocks of technologies from Arm and other sources to create their chips.
According to Williamson, as semiconductor manufacturing process tech continues to evolve and processors become more complex, the cost and time to do that work of stitching together various blueprints, testing and validating it all, and bringing the final chip to market is increasing, so Arm thinks offering its IP in the form of more completed sets will be appreciated.
That is to say, Arm will offer more complete designs that it has already validated and optimized, hopefully saving time and effort for licencees and giving Arm more valuable IP to license and thus, ideally, more revenue and profit.
"Our partners are looking to us to fill more of that gap and help them get to market sooner. So, we have offerings around Compute Subsystems (CSS) that bring some of that technology together."
Providing ready-to-roll building blocks needed to make a chip, and offering them in a form that leading foundries can fabricate right away, also gives Arm a chance to win new customers that would otherwise be leery of developing their own silicon.
Arm's recently announced Neoverse CSS is among the first of these offerings. Announced at the Hot Chips conference last month, and described in great detail here by our friends at The Next Platform, this product line is essentially a take-and-bake set of CPU cores that includes most critical elements of a processor design. Arm says customers can tweak the memory and IO to their liking, and add their desired on- or off-die accelerators.
Williamson told The Register Arm intends to offer a full suite of these pre-validated processor designs for a variety of market verticals.
That’s the sort of offering that can attract premium pricing, on grounds that the time and resources saved on development justify the higher upfront cost. "We don't share details of commercial agreements. The compute subsystem approach we are delivering accelerates time to silicon and faster market adoption for the Arm-based platforms our partners are building. The value we provide for our partners is enabling them to focus on differentiation while we provide the trusted foundational computing platforms they need to get to market quickly," Dermot O'Driscoll, VP of product solutions for Arm's infrastructure line of business toldThe Register in response to questions.
Architectural licenses a liability?
The push to develop more complex designs comes as Arm's pre-IPO regulatory filings spelled out that the outfit prefers its customers to, at a minimum, use its core designs rather than develop, under license, their own processors that are compatible with Arm's instruction sets and architecture with little or no actual blueprints from Arm.
"If our customers, and particularly one or more key customers from whom we generate a significant portion of our total revenues, elect to develop their own processors based on our [instruction set architecture] ISA, the market for our developed processor portfolio would decline, which could have a material adverse effect on our business, results of operations, financial condition and prospects," the filing stated.
This is notable as several of Arm's big-name customers have already created their own compatible processors, or started work on such hardware. Apple develops its own Arm-compliant cores under an architectural license; Ampere Computing, which has found success among cloud and hyperscalers, has recently unveiled chips based on a custom core design; Qualcomm, meanwhile, attempted to buy its way into the server CPU market through the acquisition of Nuvia, a plan that has become the subject of a lawsuit in which Arm asserts Qualcomm has breached the terms of its license.
Despite this, Williamson insists that Arm's ecosystem is still "open," implying that despite a shift in focus toward ready-made designs, chipmakers are still free to develop their own cores provided they have the right architectural license. We imagine Arm will still license out its blueprints as before; it's just adding ready-to-go collections for those customers who need or want them.
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The RISC-V menace
When Arm customers create custom cores, the chip designer still collects royalties on its architectural license.
But Arm gets nothing if customers opt for alternative ISAs like the RISC-V instruction set that has attracted attention despite being nowhere as mature as Arm.
There are two reasons for interest in RISC-V, the first being that its permissive license offers the chance to build custom silicon without paying royalties.
The other is that it is very customizable. The base RISC-V ISA has fewer than 50 instructions. However it can be extended with only the instructions needed for the intended use case, and those instructions can be entirely custom.
NASA will use RISC-V in its spaceflight computer.
And China and India have made big bets on RISC-V for their indigenous processor pushes.
Qualcomm, a huge Arm customer, has been an enthusiastic proponent of the RV architecture, which it sees potential for in a wide range of products including wearables, smartphones, laptops, and connected cars. Intel has previously made big bets on RISC-V, too.
The architecture has the potential to scale from embedded electronics to datacenter-class products, such as Ventana's up coming Veyron V1 processor.
The threat RISC-V poses to Arm's bottom line hasn't gone unnoticed. The company warned investors in its pre-IPO filing that "if RISC-V-related technology continues to be developed and market support for RISC-V increases, our customers may choose to utilize this free, open-source architecture instead of our products."
Certainly, from our point of view, RISC-V is a challenger to Arm at the low end, and maybe one day at the higher end.
Quarter of Arm’s revenue is tied up in China
Another risk Arm faces is that the People's Republic of China (PRC) accounts for 24 percent of its annual revenues.
As we've previously reported, a big chunk of Arm's prospectus detailed risks posed by the Middle Kingdom. "Our concentration of revenue from the PRC market makes us particularly susceptible to economic and political risks affecting the PRC," the filing stated.
Much of this risk is predicated on worsening trade relations between the US and China creating an inhospitable business environment for Arm.
Over the past few years Western nations have leveled extensive trade restrictions on the export and sale of technology and intellectual property associated with the production of advanced semiconductors. These rules have already limited Arm's ability to license its most powerful Neoverse cores in China. Arm’s Chinese affiliate has also proven difficult to manage in the past.
Even if Arm manages to avoid stiffer export restrictions, and keeps Arm China under control, the now-public biz notes that the threat of being cut off from the Middle Kingdom could drive Chinese chipmakers to develop processors based on alternative ISAs. ®