LONDON – The leading customer of processor technology licensor ARM Holdings plc (Cambridge, England) by revenue contribution in 2010, according to Nomura Equities Research, comes as a bit of a surprise. The financial brokerage and analysis house says it was Intel Corp. (Santa Clara, Calif.).
That was my reaction too and it begs the question: what ARM-supplied services, licenses or royalties was Intel paying millions of dollars for in 2010? ARM's revenue in 2010 was $631.3 million so a 7 percent contribution means that about $44 million flowed from Intel to ARM – according to Nomura.
I am scratching my head to make sense of this. Could it be some hard disk drive controller that Intel makes by the bucket-load includes an ARM core? Or is there some ARM core that has made its way into some dusty, otherwise-forgotten corner of an Intel memory controller or image processing block that has ended up in an Intel microprocessor?
And guess what? AMD is on the list ahead of the likes of Infineon, Apple and Qualcomm.
I make no defense of the list which is actually 15 entries long, but even if it is just Nomura's opinion it is an interesting talking point.
And it is what Nomura is telling potential investors in ARM Holdings plc in a 53-page note to clients that re-assesses Nomura's long-term view of ARM as a potential investment. Nomura attributes the customer ranking to "Bloomberg data as of Nov. 3, 2011," without much further discussion, except to say that ARM's customer base is broad and the company is not dependent on just a few customers.
Here's that Nomura/Bloomberg list in full, ranked by percentage contribution to ARM's revenue in 2010.
Intel 7.0% TSMC 5.7% Samsung 5.7% TI 4.6% NEC 3.5% ST 3.5% ZTE 2.8% Broadcom 2.6% AMD 2.5% Infineon 2.4% Apple 2.1% Qualcomm 2.0% Fujitsu 1.9% UMC 1.9% Lenovo 1.8%
It would, of course, be very interesting to see an equivalent list for 2011.
I think people forget that ARM has a physical libraries, IO cells libraries and memory compilers and other assorted physical IP as part of the Virage acquisition. Given Intels scale of revenues I am sure thats where the money is coming from. Not ARM CPU licences.
Intel as ARM's biggest customer is 2010 is odd - but foundry manufacture is good call Rick.
Intel maybe making stuff for Apple that includes ARM cores. I wonder who AMD was making stuff for..they were almost (but not quite?) out of manufacturing by 2010 with the creation of Globalfoundries.
The Nomura list, if correct, suggests that ARM gets more of its royalties from companies MAKING chips with its cores as opposed to DESIGNING OR SELLING those chips.
That would explain TSMC and Samsung being ahead of say Qualcomm and Apple. And it would imply Intel may be acting as foundry to some ARM-based chips.
But this is all guesswork on my part.
I think ARM's policy has always been not to take too much out of their partners, so as to be the much lower cost option and to be non-threatening.
Of course after 20 years of following that policy they are now in a good position to start cranking up license fees and royalty rates.
I think initial license fees have gone from about $1 million per core to $5 million but ARM would, I am sure, argue that they are providing much greater performance on ARM15 than on ARM7 so paying more is appropriate. And it is very hard to compare like with like as license varieties have increased.
With regard to royalty rates even if ARM does push them up, their customers go to higher and higher volumes thereby earning discounts so that the average ARM royalty per shipped unit is actually going down.
According to ARM supplied data it was 6.1 cents per unit in 2007, 5.7 cents in 2008, 5.4 cents in 2009 and 4.8 cents in 2010. But over the same period units shipped per year had gone from 2.9 billion to 6.1 billion.
It continues to surprise me that given the ubiquitous presence of ARM cores in all things mobile that their business model does not generate more revenue. Given their out sized importance to many companies you would think that they could charge more.
David Patterson, known for his pioneering research that led to RAID, clusters and more, is part of a team at UC Berkeley that recently made its RISC-V processor architecture an open source hardware offering. We talk with Patterson and one of his colleagues behind the effort about the opportunities they see, what new kinds of designs they hope to enable and what it means for today’s commercial processor giants such as Intel, ARM and Imagination Technologies.