(Editor's note: This article responds to our story on ARM success could trigger takeover bid, says analyst.)
Semiconductor intellectual property (IP) is a way for chip makers to share the cost of developing standard designs so that they can invest more in the differentiating features of their chips. For ARM to be controlled by any one of its customers or even a small group of its customers would break the IP business model.
ARM will certainly harvest splendid royalty payments from chip designs in a wide range of consumer electronics, including netbooks, smartbooks, and notebooks. Presumably that expectation is built in to ARM's current market valuation. As the strong market share leader in its field, ARM needs to provide standards-based product offerings beyond just processor cores.
Towards that goal ARM has taken actions such as building or acquiring semiconductor IP cores for commonly used peripherals such as SDRAM interfaces and accelerators such as their Mali line for 3D graphics. An even more insightful move by ARM was their 2004 acquisition of Artisan, the leading makers of the standard cell libraries essential for synthesizable logic design for chips.
Like the semiconductor IP business, the EDA business is a key enabler of chip designs. EDA tool vendors allow semiconductor companies to share the cost of developing tools to design chips. Recently, Synopsys (Mountain View, Calif.) has taken a strong lead in its field of three major EDA vendors and must now reach beyond its main product lines in order to find new value to offer its customers.
Synopsys and ARM have largely complementary product offerings. The two companies have collaborated on various projects including jointly funded research, cooperation within industry standards bodies, and the writing of chip design best practices books that carry a combined logo of the two companies. Only after recent speculation about the two companies' relationship did all web images of the combined logo disappear.
The synergies between ARM and Synopsys make for a logical tie-up. Both are approximately the same size, and a merger would likely create an entity worth more than the sum of its parts.
Jonah Probell is CEO of YAP IP, a processor architect, and an analyst of the semiconductor IP, digital video, and consumer electronics markets. He can be reached at firstname.lastname@example.org