"Arm CEO Sees a ‘Huge Tailwind’ From New Chips. Nvidia and Intel Are Helping Too." (ARM)

From Barron's, March 13:

Arm’s stock has soared since last year’s IPO. Why CEO Rene Haas is so confident about the company’s growth.

This article is from the free weekly Barron’s Tech email newsletter. Sign up here to get it delivered directly to your inbox.

Model Shift. Hi everyone. Arm Holdings makes money by licensing its chip designs to semiconductor companies and hardware makers. For decades, skeptics have questioned the value of the firm’s technology; its designs often made only cents per chip.

Times have changed. Last month, Arm blew away Wall Street expectations for its December quarter, while offering an outlook that was far above the Wall Street consensus. The main drivers were a shift to higher royalty rates and gains in the cloud server market. “The AI wave drove licensing growth as these new devices require Arm’s performant and power-efficient compute platform,” CEO Rene Haas wrote in a letter to investors.

Arm’s latest advanced chip technology, called Armv9, generates double the royalty rates of its previous Armv8 products. For some high-end processors, which combine more than 100 “cores,” Arm’s designs are now pulling in more than $100 per chip. It’s a massive change from prior generations.

Cloud server chips based on Arm technology also benefit from the rapid growth in AI with Nvidia using Arm for its GH200 AI Superchip data center systems. A GH200 Superchip can have up to 144 CPU cores and Arm gets paid for each one.

I recently spoke to Haas about company’s progress in the cloud server market, the company’s business model shift, and its partnerships with Nvidia and Intel . The CEO sounded incredibly confident about the company’s outlook.

Arm’s stock has been a stellar performer, recently trading at $131, more than 150% above its September IPO price of $51.

The question for investors now is whether the company’s recent financial performance is sustainable.

I, for one, am bullish. Arm’s customers have been willing to pay the higher royalty rates, meaning the boost from Armv9 is likely in the early stages. Further, Arm-based cloud server chips from Amazon Web Services, Microsoft ,

Nvidia, and others will likely generate robust revenue for years.

Outside of Nvidia, Arm may be the best fundamental growth story in technology.

Here are edited highlights from my conversation with Haas:

Barron’s: Can you talk about Arm’s opportunities in the cloud server data center market. It looks like this business is starting to take off.

When we were privatized, we had an opportunity to look at what to do with our investment dollars. With data centers, we noticed several things that we could do. If you want to put together processors, we were lacking a fabric [to weave the network together]. We were lacking certain extension instructions. So we designed CPUs with the right power profile, features, and performance.

Then there was a bunch of work that needed to happen in the software ecosystem. The magic moment came when Red Hat announced their Linux distribution for Arm servers. It all came together.

Amazon  saw it very early. Roughly half of Amazon’s AWS server additions are now Arm-based.

We also changed our business model. In the past, it would have been crazy to think Arm would someday get paid $100 for each SoC [system- on-a-chip]. But that is what we are getting after we priced at 50 cents to $1 per core. If you put in 100 cores, we are getting north of $100 on these SoCs.

What kind of demand are you seeing for the Nvidia GH200 Grace Hopper AI systems? In the last earnings report, you noted how the GH200 will run some of the most demanding AI applications in the world today.

It’s very, very strong. Nvidia is pushing it very hard. What Nvidia has done with Grace Hopper is essentially taken 72 to 144 Arm CPU cores, and bolted it to an H100. It replaces the x86 implementation. Nvidia has also done all the CUDA driver work for Arm-based CPUs. It’s great for us that Nvidia is shipping it.

What’s the impact to the business going from Armv8 to Armv9? I saw that Armv9 accounted for 15% of royalty revenue in the December quarter from 10% the prior quarter. Is that pace going to keep up?

It is. A couple of things to keep in mind on v8 to v9. We’re going to see very, very fast adoption with v9. Everything that we do in servers is v9. It’s more power efficient and has a huge amount of security features....

....MUCH MORE

Also at Barron's:

Tesla Might Just Have Given Us a Way to Predict Tuesday’s Delivery Number

IoT: "SoftBank's ARM Spends Big to Meet Son's Connected World Dream"

From Bloomberg, January 11:

These days ARM Holdings Plc is expanding at such speed co-founder Mike Muller has to make a reservation before he can use his own office.

“This has become a meeting room so I have to book it when I’m here because we’ve run out of space,” said the company’s chief technology officer in an interview at ARM’s Cambridge, U.K., headquarters.

ARM has added about 2,000 employees bringing its headcount to just shy of 6,000 at the urging of Japan’s SoftBank Group Corp., which bought the company in 2016. This has cramped its existing facility, where employees are spread out among six low-slung office buildings.

ARM will soon move to a new 48-million pound ($61 million) building on the Cambridge campus -- featuring a vast 180-meter long atrium bookended by “floating” staircases, and wired with more than 1,000 kilometers of ethernet cabling. While begun before the SoftBank acquisition, it’s a headquarters that befits ARM’s newfound swagger and ambition.

“It’s quietly understated," Muller says with typical British irony, before adding, "It’s nice, it’s big."

Founded in 1990, ARM quietly grew into the U.K.’s largest listed company before SoftBank’s $32 billion takeover. It designs chips that are licensed to the world’s largest technology companies. As a result, just about every smartphone, mobile phone, and tablet runs on an ARM chip.

Now under SoftBank Chief Executive Officer Masayoshi Son, the English executives who run ARM are having to step out into the spotlight, due to Son’s ambitions for the company. Son presses ARM executives in meetings to move quickly through details of current operations and skip to long-range plans. He insists that ARM submit monthly updates to its 10-year business plan to keep it focused on the future.

ARM Chief Executive Officer Simon Segars said it means his job is to invest ‘like crazy’ as the company attempts to break into high-end computing and become central to self-driving car technology. Such efforts will have to start to pay off before spending is scaled back to prepare the company to go public again in about five years, as Son has indicated.

ARM’s new owner has also brought in a different audience. When Segars recently showed Son a new Lenovo Group Ltd. laptop built on a chip that uses ARM technology, he was asked to hang around and do a demonstration later that day for Bill Gates during a meeting with Microsoft Corp.’s founder.While Segars and his team are in the dream scenario for technology executives: invest for growth and worry about profitability later, the exchange is taking them out of their comfort zone. ARM’s technology is pervasive in semiconductors. Son wants ARM to move into software and services.

When Son first opened takeover talks with ARM, he became fascinated with a “science project,” according to Segars. One of the reasons Son bought ARM is his belief that the chipmaker, with designs that dominate the smartphone market, could achieve similar market sway in the chips that will power the internet of things -- industry jargon to describe the connection of everything from refrigerators to factory equipment to the internet.

That connected future doesn’t seem to be dawning as quickly as Son and many other futurists hoped. And one reason is because all those connected devices present a huge management hassle -- they must be made secure, have their software updated and stay connected. Doing this is technically complicated, and potentially expensive.

Another problem is that ARM didn’t have much expertise in services for the internet of things. It had always been two steps removed from the actual end users of the devices that incorporated chips made with its designs.

So now, with Son’s encouragement, ARM has begun bulking up its IoT services division. In August, the company spent $600 million for U.S.-based data analytics startup Treasure Data Inc. -- its largest deal in 14 years. In June, the target was Stream Technologies, a Glasgow-based company that improves connectivity for internet of things devices....MUCH MORE

Chips: "Apple and Samsung to invest in SoftBank's Arm at IPO -Nikkei"

We used to call ARM Holdings the Crown Jewel of Brittech but then they let it get away.*

If Apple and Samsung are joining Intel: Chips: "Arm Courts Intel as Anchor Investor in Upcoming IPO" where does that leave NVIDIA? 

October 12, 2020 

Chips: "One On One With Jensen Huang: Nvidia, The Platform Company" (NVDA)

....“Our company can realize all of our hopes and dreams without Arm,” Huang explains, calling it a once in a lifetime opportunity that SoftBank wanted to sell Arm Holdings where “it was like my mind exploded, it was so good” and that it took three decades to build Arm into what it is and that “this is a team that won’t get built again” if the deal doesn’t go through....

Some of our posts on Arm:
https://climateerinvest.blogspot.com/search?q=Arm

Including this 2013 post:
"The most overwhelmingly positive annual report you will ever see out of any technology company"

As a general rule we usually follow computer technology from a users point of view and don't do much on the blog outside of the Top 500 list of the fastest supercomputers in the world. This story is a bit different.

Enough history, here's Reuters via Yahoo Finance, August 8:

(Adds Samsung did not have an immediate comment, while Apple, Nvidia and Intel did not immediately respond in paragraph 6.)

TOKYO, Aug 8 (Reuters) - Apple and Samsung Electronics will invest in SoftBank Group -owned chip designer Arm at its initial public offering (IPO), expected in September, Japan's Nikkei newspaper reported on Tuesday.

Reuters reported in June that Arm was in talks with some ten companies - including Apple, Samsung and Intel - with the aim of bringing on one or more anchor investors in the offering.

Last month, Reuters and other media reported that Arm was in talks to bring in U.S. chip designer Nvidia as an anchor investor for the New York listing.

Apple, Samsung, Nvidia and Intel all plan to invest in Arm as soon as it is listed on the market, the Nikkei said. The SoftBank-owned firm will officially apply to the U.S. Securities and Exchange Commission for the listing later this month, the newspaper said.

Arm plans to sell the chipmakers stakes of "a few percent each", the newspaper said.

SoftBank declined to comment. Apple, Nvidia and Intel did not immediately respond to a Reuters' request for comment. Samsung did not have an immediate comment....

....MUCH MORE

From July 2020's "SoftBank Explores a Sale or IPO of Chip Company Arm":

I'd like to own this one.
As noted over and over again, Queen Elizabeth should have put her foot down* when the parvenu Mr. Son made his bid. See last October's:
"Q&A with Steve Roddy, vice president of the machine learning group at Arm, on culling neural nets for embedded devices, competing with Nvidia and Intel, more"  
Here's hoping that Softbank and Mr. Son are compelled by recent misadventures to re-float ARM....

***** 

*See also:
May 2019
"SoftBank mulls IPO of $100 billion Vision Fund"

Crap. As we've said on these pages a few times, a cash crunch to force the re-listing of ARM Holdings would have been nice....

*****

....The RCEWA should have figured out how to designate ARM as an Object of Cultural Interest pursuant to the 2002 Export Control Act.
Or something.

Oh well, the RCEWA did keep T.L Lawrence's dagger in British Hands.

"UK May Reject Nvidia's Bid to Buy ARM on National Security Grounds"

From ExtremeTech, August 5:

There are reports that the UK government may act to block Nvidia’s purchase of ARM on the basis of national security. If true, this would represent a blow to Nvidia’s long-term plans. We suspect that Team Green has planned for this eventuality and has made contingency plans if its purchase of ARM does not pan out.

The rejection — which is only rumored at this point — is based on a report compiled at the request of UK Culture Secretary Oliver Dowden. It is said to warn against allowing Nvidia to acquire ARM on the basis of national security, but Bloomberg does not specify what the precise national security concerns are. This seems relevant. We have never seen public evidence proving Huawei works or spies on foreign nations at the behest of the Chinese government (which is not the same thing as saying such evidence does not exist), but past reports have suggested the company’s data security practices were poor. Sufficiently poor security could be grounds for rejecting Huawei equipment even without deliberately bad behavior.

Nvidia is not likely to be in the same boat as Huawei where security issues are concerned. “We continue to work through the regulatory process with the U.K. government,” an Nvidia spokesperson told Bloomberg. “We look forward to their questions and expect to resolve any issues they may have.”

We doubt the national security concerns cited by the UK are anchored in specific security practices. It seems more likely (absent the full report) that this concern is based on what we’ve previously dubbed “silicon nationalism.”

During the pandemic, a number of nations awoke to the fact that semiconductor production is absolutely vital for any modern economy. TSMC’s dominance of the pure-play semiconductor manufacturing industry means it also accounts for most of the leading edge manufacturing capacity. This has made both the EU and US rather nervous, but European companies have a very different relationship with the semiconductor industry than the US does. In the EU, most commercial demand for silicon is for products that are not built on the leading edge....

....MUCH MORE

Related: 

July 7

NVIDIA Opens UK's Fastest Supercomputer To Outside Researchers, Academic and Commercial

June 15
Chips: If ARM - NVIDIA Deal Is Blocked Qualcomm Prepared To Swoop In
April 23
"Nvidia’s $40 Billion Deal for Arm Faces U.K. National-Security Probe " (NVDA)

April 1 

Chips: "Arm’s v9 Architecture Explains Why Nvidia Needs To Buy It"

February 19 

Chips: Big Tech Comes Out Against Nvidia's Acquisition of ARM (NVDA)

NVIDIA is also big tech but at $372 billion market cap not big like the big bigs who protest, GOOG, MSFT, and even QCOM at $165 bil. mkt cap. isn't tiny but could really be hurt by the acquisition....

October 12, 2020 

Chips: "One On One With Jensen Huang: Nvidia, The Platform Company" (NVDA)

....“Our company can realize all of our hopes and dreams without Arm,” Huang explains, calling it a once in a lifetime opportunity that SoftBank wanted to sell Arm Holdings where “it was like my mind exploded, it was so good” and that it took three decades to build Arm into what it is and that “this is a team that won’t get built again” if the deal doesn’t go through....

October 7 

"Nvidia CEO Jensen Huang says ARM’s been too specific, needs to be a broad computing platform" (NVDA)

September 30  

"Huang's Law Is the New Moore's Law, and Explains Why Nvidia Wants Arm" (NVDA)

September 29, 2020 

"Pressure grows for U.K. to intervene in Nvidia’s $40 billion Arm takeover" (NVDA)

August 2020 

"Nvidia Buying Arm Would be Reckless"

The Financial Times' Bryce Elder (soul of a poet, mind of an abnormal psychology professor) has some comments on chip designer Arm Holdings which reminded me that we had a couple links to the electrical engineering types at EE Times.....

 

And many more. It's a very big deal, on many different levels

Chips: "Arm’s v9 Architecture Explains Why Nvidia Needs To Buy It"

From The Next Platform, March 30:

Many of us have been wracking our brains why Nvidia would spend a fortune – a whopping $40 billion – to acquire Arm Holdings, a chip architecture licensing company that generates on the order of $2 billion in sales – since the deal was rumored back in July 2020. As we sat and listened to the Arm Vision Day rollout of the Arm V9 architecture, which will define processors ranging from tiny embedded controllers in IoT device all the way up to massive CPUs in the datacenter, we may have figured it out.

There are all kinds of positives, as we pointed out in our original analysis ahead of the deal, in our analysis the day the deal was announced in September 2020, and in a one-on-one conversation with Nvidia co-founder and chief executive officer Jensen Huang in October 2020.

We have said for a long time that we believe that Nvidia needs to control its own CPU future, and even joked with Huang that it didn’t need to have to buy all of Arm Holdings to make the best Arm server CPU, to which he responded that this was truly a once-in-a-lifetime opportunity to create value and push all of Nvidia’s technologies – its own GPUs for compute and graphics and Mellanox network interface chips, DPU processors, and switch ASICs – through an Arm licensing channel to make them all as malleable and yet standardized as the Arm licensing model not only allows, but encourages.

Huang would be the first to tell you that Nvidia can’t create every processor for every situation, and indeed no single company can. And that is why the Arm ecosystem needs to not only be protected, it needs to be cultivated and extended in a way that only a relatively big company like Nvidia can make happen. (Softbank is too distracted by the financial woes of its investments around the globe that have gone bad and basically has to sell Arm to fix its balance sheet. Which is a buying opportunity for Nvidia, which is only really spending $12 billion in cash to get control of Arm; the rest is funny money from stock market capitalization, which in a sense is “free” money that Nvidia can spend to fill in the remaining $28 billion.)

We have sat through these interviews, and chewed on all of this, and chocked it up to yet another tech titan having enough dough to do a big thing. But, as we watched the Vision Day presentations by Arm chief executive officer Simon Segars and the rest of the Arm tech team, they kept talking about pulling more vector math, matrix math, and digital signal processing onto the forthcoming Arm V9 architecture. And suddenly, it all finally became clear: Nvidia and Arm both believe that in a modern, massively distributed world all kinds of compute are going to be tailored to run analytics, machine learning, and other kinds of data manipulation and transaction processing or preprocessing as locally as possible and a single, compatible substrate is going to be the best answer to creating this malleable compute fabric for a lot of workloads. What this necessarily means is that both companies absolutely believe that in many cases, the applicability of a hybrid CPU-GPU compute model will not and cannot work.

In other words, Nvidia’s GPU compute business has a limit to its expansion, and perhaps it is a lot lower than many of us have been thinking. The pendulum will be swinging back to purpose built CPUs that have embedded vector and matrix capabilities, highly tuned for specific algorithms. This will be specifically true for intermediate edge computing and endpoint IoT devices that need to compute locally because shipping data back to be processed in a datacenter doesn’t make sense at all, either technically or economically.

Jem Davies, an Arm Fellow and general manager of its machine learning division, gave a perfect example of the economic forces that are driving compute out of the datacenter and into a more diffuse data galaxy, as we called it three years ago.

“In the Armv9 decade, partners will create a future enabled by Arm AI with more ML on device,” Davies explained. “With over eight billion voice assistive devices. We need speech recognition on sub-$1 microcontrollers. Processing everything on server just doesn’t work, physically or financially. Cloud computing bandwidth aren’t free and recognition on device is the only way. A voice activated coffee maker using cloud services used ten times a day would cost the device maker around $15 per year per appliance. Computing ML on device also benefits latency, reliability and, crucially, security.”

To bring this on home, if the coffee maker with voice recognition was in use for four years, the speech recognition cost for chewing on data back in the Mr Coffee datacenter would wipe out the entire revenue stream from that coffee maker, but that same function, if implemented on a device specifically tuned for this very precise job, could be done for under $1 and would not affect the purchase price significantly. And, we think, the coffee maker manufacturer could probably charge a premium for the voice recognition and recoup some or all of the investment in the technology added to the pot over a reasonably short time until it just became normal. Like having a clock and timer in a coffee maker did several decades ago, allowing us all to wake up to a hot cup of java or joe or whatever you call it in the morning by staging the ground coffee beans and water the night before....

....MUCH MORE

"Pressure grows for U.K. to intervene in Nvidia’s $40 billion Arm takeover" (NVDA)

From MarketWatch:

Last Updated: Sept. 29, 2020 at 1:23 p.m. ET  
First Published: Sept. 29, 2020 at 11:33 a.m. ET 

Critics cite national security, homegrown technology, and jobs among concerns surrounding SoftBank’s sale of Arm to Nvidia 

The U.K. government is assessing the impact of Nvidia’s $40 billion takeover of Arm, as pressure for it to intervene and protect the Cambridge-based chip maker grows.
It comes amid a growing backlash against the deal, as shareholders, politicians and industry experts raise concerns over national security, the loss of crucial homegrown technology, and key roles to a foreign buyer.

The Santa Clara, California-based graphics chip giant announced a deal on Sept. 13 to buy Arm from its current owner, SoftBank of Japan, in a move designed to transform the global semiconductor landscape. 

Arm’s chips are used worldwide to help power mobile device processors for companies including Apple,  Amazon, Samsung and Qualcomm.

Critics of the deal have warned that Arm’s acquisition by Nvidia, which recently overtook Intel to become the world’s most valuable chip maker, will place too much dominance in one company’s hands.
The deal still needs to gain approval from regulators in a number of countries, including the U.S., the U.K., and China, and in the European Union.

What has Nvidia promised?
Nvidia has pledged to keep Arm’s headquarters in Cambridge and expand its research and development presence in the English city, including building an artificial intelligence and education center.

It said it will not change Arm’s business model of licensing its designs to customers, and Nvidia has promised to add its own technology to the portfolio of intellectual property that Arm can license.
When SoftBank acquired Arm in 2016, it made legally binding assurances that the headquarters would stay in Cambridge, and to double the company’s U.K workforce over five years....

....MUCH MORE

Also at MarketWatch:
Opinion: Nvidia’s deal with Arm paves the path to a trillion-dollar market value

Related:
"Arm co-founder starts ‘Save Arm’ campaign to keep independence amid $40B Nvidia deal" (NVDA)

Cambridge Tech Grandee Hermann Hauser Says Selling ARM to Nvidia Would Be a Disaster

"Nvidia Buying Arm Would be Reckless"

"The most overwhelmingly positive annual report you will ever see out of any technology company"

As a general rule we usually follow computer technology from a users point of view and don't do much on the blog outside of the Top 500 list of the fastest supercomputers in the world. This story is a bit different.
From Quartz:

Cambridge, England-based ARM Holdings just released its annual report, and two facts stand out: The first is that the company is on track for explosive growth. The second is that most of ARM’s future revenue, all of which comes from royalties, will almost certainly derive from licensing deals the company has already locked in.

ARM does one thing exceptionally well: Design the innards of the microchips that appear in almost every smartphone or tablet you’ve ever laid hands on. Their licensees, who take ARM’s reference designs and modify them for their own needs, include Apple, Samsung, Qualcomm and countless other manufacturers of fast but power-sipping microchips. But it’s not just mobile devices—ARM chips also show up in the boxes that pipe content onto our TVs, the infrastructure that enables our internet connections, and even an increasing share of the servers in data centers with which we communicate every time we open a web browser or stream a movie.

It’s worth noting that ARM remains a shockingly small company, given its influence. Its value on the stock market is only $20 billion (ailing PC maker Dell just went private for $24 billion). Its fourth quarter revenue was up 19.2% from the same period last year, but was merely $164.2 million. Compared to giants like Samsung and Apple or even mid-sized technology companies like HP and Dell, ARM is small fry, indeed.

And yet more than 90% of its income came from licenses it signed with manufacturers before 2008, according to its annual report. Of its approximately 960 licensees (some, like Apple, the company does not publicly acknowledge) 410 signed with ARM since 2009. It’s not clear that those licensees will sell as many chips as the first 550. But if they did, ARM’s revenue could be expected to increase proportionally in the coming years.

Most of ARM’s revenue comes from older licenses, and if new licensees do well, the company’s revenue could grow rapidly.ARM

Aside from global explosion of sales in smartphones and tablets, ARM’s projected growth comes from the sheer ubiquity of processors made by its licensees. As our world becomes ever more computerized, ARM is becoming a de facto standard. It’s not an exaggeration to say that ARM chips are in everything from your smartphone to your washing machine, and that future gadgets will in some sense be uniquely enabled by the combination of power, small size and low electricity use that is the trademark of ARM’s designs....MORE

Chips: "ARM China Seizes IP, Relaunches as an ‘Independent’ Company"

 From ExtremeTech, August 30:

The onetime CEO of ARM China, Allen Wu, has reportedly seized control of ARM’s Chinese business venture, ARM China. Mr. Wu is accused of attempting to launch his own company, Alphatecture, by leveraging his position at ARM China to do so. Companies were reportedly offered discounts on ARM China products if they would invest in Alphatecture. Investors and ARM agreed to oust Wu for this behavior in a board vote, 7-1, but Wu still possessed the seal of the company, which makes him its legal representative as far as Chinese law is concerned.

Wu hired security to keep ARM employees from entering ARM China, fired employees who did not wish him to take over the company, and has sued ARM China to declare his own dismissal as CEO illegal. This means Allen Wu (person) is suing Allen Wu (ARM China). As Devin Patel reports, ARM has responded by refusing to transfer any IP from its new products. The newest CPU core ARM China has access to is the Cortex-A77.

Wu has responded in turn by holding an event declaring that 安谋科技 (this appears to mean ARM Limited) is an enormous success, and that it would soon ship a new “XPU” line of products consisting of AI accelerators and processing units, image signal processors, security processors, and video processors. Most of this equipment is targeting the IoT market....

....MUCH MORE

"Arm's stock rally shows investor hype extends to theoretical AI plays..." (ARM)

I don't care who you are, that's funny right there. - Larry the Cable Guy

The meme stock people are all-in on ARM as artificial intelligence. while somewhat jaded (realistic) old pros are mockingly referring to it as AI.

Us? On February 13 it was:
Chips: "Arm bigger than all but two FTSE 100 companies after shares rocket" (ARM)
It is the crown jewel of BritTech but it's not (yet) an AI play.

Preceded by "Chips: "Arm stock soars 35% as chip maker sees ‘signs of recovery’ in its market, raises guidance for the year" (Quick, Hire a Kid)" on February 7:
There's an interesting dichotomy developing in the markets, one that we've seen before.
The old pros are cautious, befuddled and a bit scared. Folks with less than a decade at the market are making money.

And the headline story from Yahoo Finance, February 14:

Those waiting for the artificial intelligence bubble to pop have been let down this earnings season.

In the latest sign that AI exuberance is alive and well in markets, Arm Holdings (ARM) stock has surged more than 70% in the last five days of trading after topping Wall Street's earnings estimates on Feb. 7.

And, perhaps most importantly, the chipmaker attributed its better-than-expected revenue forecast to artificial intelligence.

"When you think about artificial general intelligence, that's going to drive the need for more compute in a way that we've never seen before," Arm CEO Rene Haas told investors on the company's earnings call. "So as good as the last couple of quarters were, we're just at the beginning."

Arm soared nearly 50% in the next day of trading.

Shares at one point doubled from their pre-earnings price before a hotter-than-expected inflation report tempered the recent risk-on narrative in markets. Amid a broader market sell-off, Arm shares tumbled nearly 20% on Tuesday.

And while investors are buying the potential benefits, Wall Street is a bit more cautious on how the disruptive technology fully contributes to earnings growth for Arm moving forward.

Needham & Company analyst Charles Shi told Yahoo Finance Live that the firm isn't even sure Arm is that much of an AI play, with its current exposure to generative AI "quite small."

"It remains to be seen whether they can actually benefit from generative AI going into the future," Shi said.

This has become a prevailing theme among other popular AI trades like C3.ai (AI) and Palantir (PLTR). Wall Street wants to see further actual results and investors just want to hear more AI mentions....

....MUCH MORE

After yesterday's $28.99 whack the stock is up again today +$6.60 (+5.50%) at $126.58.

And AI stocks? In 2020 we posted this introduction to:

Investor's Business Daily on Artificial Intelligence Stocks

There is a definitional problem with the term "AI stocks [or companies]" in that AI is a tool. Much as the (over) hyped nanotechnology revolution didn't produce "nanotech stocks" but instead became incorporated into processes and procedures that give companies employing same an incremental edge rather than epochal shifts.*

However, if there is an AI "company" Nvidia would deserve the moniker as much as anyone....

Chips: "Arm Courts Intel as Anchor Investor in Upcoming IPO"

From Bloomberg

• SoftBank-backed Arm is in talks with Intel, other companies
• Arm is seeking to raise as much as $10 billion in IPO 

Arm Ltd., the chip designer backed by SoftBank Group Corp., is in talks with potential strategic investors including Intel Corp. to anchor what will be one of the largest initial public offerings of the year, people familiar with the matter said.

UK-based Arm has held talks with other companies about participating in the IPO, according to the people, who asked not to be identified discussing confidential information.
Talks are in the early stages and could still fall apart ahead of the listing, they said. It’s also unclear how much would be invested in Arm, or what the structure would be. Representatives for Intel and Arm declined to comment.

Shares in SoftBank rose as much as 7.7% in Tokyo on Tuesday. Intel shares were up less than 1% Tuesday morning in New York.

Arm is looking to raise as much as $10 billion in a New York listing later this year, having rejected repeated appeals from UK prime ministers to tempt the home-grown technology giant back to London, where it once traded. The lure of higher tech valuations and a deeper investor base in the US ultimately won out for Arm, which is expected to list on the Nasdaq exchange.

Build Momentum
Bringing on an anchor investor can help drum up interest and momentum in an IPO, especially in a rough market for new listings. If the talks succeed, Intel would eventually be listed in Arm’s IPO prospectus ahead of the listing.

Anchor investors buying $100 million to $200 million worth of shares have been popular for semiconductor-related IPOs in recent years. Growth equity firm General Atlantic invested about $100 million in Intel-backed Mobileye Global Inc.’s IPO last year while Qualcomm Inc. backed GlobalFoundries Inc.’s listing in 2021.

More: Understanding Arm’s Strategic Importance in Chips: QuickTake....

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Some of our posts on Arm:
https://climateerinvest.blogspot.com/search?q=Arm

Chips: The Story Of Arm

From the Chip Letter substack (byte-sized stories...), February 5:

The Arm Story Part 1 : From Acorns

How a new RISC architecture was developed at a small British company.

*****

Hermann Hauser
A Personal Prologue

One dark and cold evening in the mid-1980s a young student walked through the ancient streets of Cambridge in the U.K. to a Victorian lecture theatre. Once in the building, he was joined by a couple of dozen other students to listen to a talk about a new piece of computer hardware.

The man giving the talk worked for Acorn Computers, makers of the BBC Microcomputer. His presentation was startling. Acorn needed a replacement for the ageing 8-bit 6502 microprocessor used in the BBC micro. They’d looked at new designs from US firms like Intel and Motorola, and they didn’t like them. So they’d designed their own.

That was surprising enough. It seemed bold for a company with no previous experience to design a microprocessor from scratch. What followed was even more remarkable. The chip Acorn had designed was 32-bit rather than 16-bit like the competitors. And not only was it faster, it also used a lot less power.

That student was me. The new microprocessor was the first Acorn RISC Machine, the first of a series of designs that we now know as Arm. There are many things about that evening where my memory has faded. I think the presenter was Steve Furber, but I can’t be certain. I don’t believe that there was a demonstration of the new system that evening. I do remember being surprised, impressed and somewhat sceptical about Acorn’s new microprocessor.

Fast-forward almost four decades, and we know how the story has played out. Arm processor designs are now used in hundreds of billions of devices around the world.

In this series of posts, I’m going to revisit the story of Arm, starting with its origins inside Acorn.

I was initially a little reluctant to write about the early years of Arm. There have been lots of excellent and extensive descriptions of the story (see the supplement to this post for lots and lots of links!), but in the end there were a few aspects of the story that I felt deserved more focus. I hope that, even if you’re familiar with the Arm story, then you’ll find some new points of interest.

Throughout this series of posts, we’ll be looking to answer one simple question. Why did this architecture from a small, ultimately failed, British company come to be so important and to survive and prosper against much larger competition?

Rather than comment on this as the story progresses, I’ll look to summarise the conclusions in a post at the end of the series.

If you’re enjoyed this then you might enjoy the supplement to this post which is available to paid subscribers and which has links to over eight hours of video and lots of other materials on the early days of the Acorn RISC Machine.

So let’s travel to the ancient university City of Cambridge in the UK in the late 1970s.

Cambridge Processor Unit
It all starts with Clive Sinclair: visionary, compulsive inventor of new gadgets, and variably successful businessman.

Sinclair started his career writing technical guides for electronics enthusiasts in the early 1960s. He soon started to market a variety of electronic products, moving through radios to calculators and then to digital watches.

In 1978 Sinclair, working with his longstanding employee Chris Curry, launched a computer kit, the MK14, based on the National Semiconductor SC/MP 8-bit microprocessor. When Sinclair was reluctant to develop the MK14 further, Curry teamed up with Hermann Hauser, a physics postgraduate at the University, who had also grown interested in the MK14.

Hauser had been born in Austria and had taken his first degree in Vienna before leaving to start his PhD at Cambridge. Hauser met Chris Curry, who shared his enthusiasm for microprocessors and convinced the Austrian to start a company with him to build products based on microprocessors.

The new company was originally called (somewhat prophetically) Cambridge Processor Unit Limited (or CPU Ltd). They also needed a trading name and wanted a name that would put them ahead of Apple in advertisements and in the telephone directory. Acorn seemed appropriate for a company that wanted to grow, so ‘Acorn Computers’ was born....

....MUCH MORE

The Arm Story, Part 2

The Arm Story, Part 3

Related:
August 2020
Cambridge Tech Grandee Hermann Hauser Says Selling ARM to Nvidia Would Be a Disaster
Dr. Hauser is one of the poobahs of BritTech and was part of the team that spun ARM out of Acorn Computers in 1990....

September 2020
"Arm co-founder starts ‘Save Arm’ campaign to keep independence amid $40B Nvidia deal" (NVDA)

Dr. Hauser is also invested in this one:
British AI Startup Graphcore Raises $200 Million From BMW, Microsoft

ARM Chips with Nvidia AI Could Change the Internet of Things

SoftBank owns ARM, which had been the pride of British high tech. Softbank had a $5 billion stake in NVIDIA that they contributed to the Vision Fund. Mr. Son has a plan.
Along those lines the Japan Times had an hilarious headline a couple months ago:
ARM embraces tech revolution under SoftBank and loses money

Despite the young pup chip companies nipping at the big dog's heels in AI,  NVIDIA is still out front and pivoting away from stuff like the crypto miners where dedicated chips make more sense, to:
"UPDATED—NVIDIA Wants to Be the Brains Behind the Surveillance State (NVDA)"
and "NVIDIA Wants to Run Your City: Smart City Control Centers (NVDA)"
and ""Nvidia's Slightly Terrifying Metropolis Platform Paves the Way for Smarter Cities" (NVDA)"

Lifted in toto from TechCrunch, Mar. 27:

Nvidia and Arm today announced a partnership that's aimed at making it easier for chip makers to incorporate deep learning capabilities into next-generation consumer gadgets, mobile devices and Internet of Things objects. Mostly, thanks to this partnership, artificial intelligence could be coming to doorbell cams or smart speakers soon.

Arm intends to integrate Nvidia’s open-source Deep Learning Accelerator (NVDLA) architecture into its just-announced Project Trillium platform. Nvidia says this should help IoT chip makers incorporate AI into their products.

“Accelerating AI at the edge is critical in enabling Arm’s vision of connecting a trillion IoT devices,” said Rene Haas, EVP, and president of the IP Group, at Arm. “Today we are one step closer to that vision by incorporating NVDLA into the Arm Project Trillium platform, as our entire ecosystem will immediately benefit from the expertise and capabilities our two companies bring in AI and IoT."

Announced last month, Arm’s Project Trillium is a series of scalable processors designed for machine learning and neural networks. NVDLA open-source nature allows Arm to offer a suite of developers tools on its new platform. Together, with Arm’s scalable chip platforms and Nvidia’s developer’s tools, the two companies feel they’re offering a solution that could result in billions of IoT, mobile and consumers electronic devices gaining access to deep learning.

Deepu Tallam, VP and GM of Autonomous Machines at Nvidia, explained it best with this analogy: "NVDLA is like providing all the ingredients for somebody to make it a dish including the instructions. With Arm [this partnership] is basically like a microwave dish."

TechCrunch home

Chips: "Arm bigger than all but two FTSE 100 companies after shares rocket" (ARM)

It is the crown jewel of BritTech but it's not (yet) an AI play.*

From The Telegraph:

British semiconductor champion Arm has eclipsed the value of all but two FTSE 100 companies as shares rallied after it posted booming sales.

Shares in Arm were changing hands for more than $158 on Monday, up 33pc on its closing price on Friday, valuing the business at over $155bn (£123bn).

The jump in its valuation means Arm is now behind only Shell and AstraZeneca in the values of FTSE 100 companies, which are worth £162bn and £147bn respectively.

Arm’s stock has more than doubled so far this year as investors flock to the microchip designer and its value has soared 159pc since the company went public on New York’s Nasdaq exchange in September.

The company’s skyrocketing share price has seen its overall value climb above HSBC, Unilever and BP as investors buy into claims it stands to benefit from a groundswell of interest in artificial intelligence (AI).

The Cambridge business, which was listed on the London Stock Exchange before it was taken private by Japan’s Softbank in 2016, designs critical technology used in billions of microchips - including smartphones and data centres.

Despite efforts from Rishi Sunak to lure the business back to the Square Mile, Arm opted for a bumper New York float which valued the business at around $55bn....

....MUCH MORE
*Some of our posts on Arm:

https://climateerinvest.blogspot.com/search?q=Arm

Including this 2013 post:
"The most overwhelmingly positive annual report you will ever see out of any technology company"

As a general rule we usually follow computer technology from a users point of view and don't do much on the blog outside of the Top 500 list of the fastest supercomputers in the world. This story is a bit different.

 And from July 2020's "SoftBank Explores a Sale or IPO of Chip Company Arm":

I'd like to own this one.
As noted over and over again, Queen Elizabeth should have put her foot down when the parvenu Mr. Son made his bid. See last October's:
"Q&A with Steve Roddy, vice president of the machine learning group at Arm, on culling neural nets for embedded devices, competing with Nvidia and Intel, more"  
Here's hoping that Softbank and Mr. Son are compelled by recent misadventures to re-float ARM....

"Q&A with Steve Roddy, vice president of the machine learning group at Arm, on culling neural nets for embedded devices, competing with Nvidia and Intel, more"

Here's hoping that Softbank and Mr. Son are compelled by recent misadventures to re-float ARM.
From Dean Takahashi at VentureBeat:

How Arm wants to bring machine learning to ordinary computing devices

Arm may be a bit late to the whole machine learning and artificial intelligence bandwagon, at least with specialized designs for modern chips. But the designer of chip intellectual property has everybody beat in terms of volumes of AI and machine-learning chips deployed in the widest array of devices.

Arm’s customers, which include rivals Intel and Nvidia, are busy deploying AI technology everywhere. The company is also creating specific machine-learning instructions and other technology to make sure AI gets built into just about everything electronic, not just the high-end devices going into servers.

On the server level, customers such as Amazon are bringing ARM-based machine learning chips into datacenters. I talked with Steve Roddy, vice president of the machine learning group at Arm at the company’s recent TechCon event in San Jose, California.
Here’s an edited transcript of our interview.

VentureBeat: What is your focus on machine learning?

Steve Roddy: We have had a machine learning processor in the market for a year or so. We aimed at the premium consumer segment, which was the obvious first choice. What is Arm famous for? Cell phone processors. That’s where the notion of a dedicated NPU (Neural Processing Unit) first appeared, in high-end cell phones. Now you have Apple, Samsung, MediaTech, [and] Huawei all designing their own, Qualcomm, and so on. It’s commonplace in a $1,000 phone.

What we’re introducing is a series of processors to serve not only that market, but also mainstream and lower-end markets. What we originally envisioned — we entered the market to serve people building VR glasses, smartphones, places where you care more about performance than cost balancing and so on. History would suggest that the feature set shows up in the high-end cell phone, takes a couple years, and then moves down to the mainstream-ish $400-500 phone, and then a couple years later that winds up in the cheaper phone.

I think what’s most interesting about how fast the whole NPU machine learning thing is moving is that that is happening much faster, but for different reasons than — it used to be, okay, the 8 megapixel sensor starts here, and then when it’s cheap enough it goes here, and then when it’s even cheaper it goes there. It’s not just that the component cost goes down and integrates in and it’s replaced by something else. It’s that machine learning algorithms can be used to make different or smarter decisions about how systems are integrated and put together to add value in a different way, or subtract cost in a different way....

....MUCH MORE

Related:
"This Tech CEO Says He's Ready to Take on Google, Facebook, Amazon, and Apple" 
"The Natural Evolution of Artificial Intelligence"

ARM Chips with Nvidia AI Could Change the Internet of Things
IoT: "SoftBank's ARM Spends Big to Meet Son's Connected World Dream"
In Case You Missed It: SoftBank Transferred its $5B Stake in NVIDIA Off Its Balance Sheet and Onto the Vision Fund (NVDA)
You Understand Why Mr. Son and SoftBank Are Circling Uber, Right?

ARM Wrestles Its Way Into Supercomputing (9984 Tokyo; INTC)
Sandia National Lab to Install First Petascale Supercomputer Powered by ARM Processors (Masayoshi Son smiles) 

"SoftBank Explores a Sale or IPO of Chip Company Arm"

I'd like to own this one.
As noted over and over again, Queen Elizabeth should have put her foot down* when the parvenu Mr. Son made his bid. See last October's:
"Q&A with Steve Roddy, vice president of the machine learning group at Arm, on culling neural nets for embedded devices, competing with Nvidia and Intel, more"  
Here's hoping that Softbank and Mr. Son are compelled by recent misadventures to re-float ARM....

From Bloomberg, July 13:

SoftBank is exploring options for selling part or all of its stake in Arm Holdings Inc., either through a private deal or a public stock listing, according to people with knowledge of the matter.

If it pursues a listing, the chip-design company could go public as soon as next year, said the people, who asked not to be identified because the deliberations are private. That would accelerate a timeline SoftBank Group Corp. founder Masayoshi Son laid out in 2018, estimating an initial share sale for Arm some time around 2023, a goal repeated in October by Arm Chief Executive Officer Simon Segars.

No decision has been made, and SoftBank could ultimately choose to hang onto the company, which is wholly owned by SoftBank Group and its Vision Fund. Son and his deputies began considering options in part because of the improving market for semiconductor companies, said two of the people. A deal would also fit into SoftBank’s current strategy to unload many of its holdings and boost the stock price through buybacks.

Goldman Sachs Group Inc. is advising on a potential deal, according to the Wall Street Journal, which reported the news earlier Monday. Representatives for Arm, Goldman Sachs and SoftBank declined to comment.

Arm was the U.K.’s largest listed technology company, receiving royalties from companies such as Apple Inc. and Samsung Electronics Co. for chip designs used in the world’s most popular mobile phones and tablets. When Son bought it for $32 billion in 2016, change came fast. The company added about 2,000 employees and made plans for a new 48 million pound ($60 million) U.K. office building.

The chip designer is still currently valued by SoftBank at its acquisition price, according to the Japanese company’s latest quarterly filings. But semiconductor stocks have been on a tear. Nvidia Corp.’s market value topped Intel Corp.’s last week for the first time, powered by soaring demand for graphics chips in data centers and other fast-growing technology fields.

Arm would need ample time to make preparations for a listing if it goes that route. Marcelo Claure, the chief operating officer at SoftBank, said in an interview with the Financial Times published Monday that he doesn’t expect Arm to be public in the next 12 months....

....MORE

Here's the FT story:
SoftBank ready to do deals as shares soar to 20-year high

*See also:
May 2019
"SoftBank mulls IPO of $100 billion Vision Fund"
Crap. As we've said on these pages a few times, a cash crunch to force the re-listing of ARM Holdings would have been nice....

*****

....The RCEWA should have figured out how to designate ARM as an Object of Cultural Interest pursuant to the 2002 Export Control Act.
Or something.

Oh well, the RCEWA did keep T.L Lawrence's dagger in British Hands.

"Arm steps up its AI investments as it cashes in on another billion-dollar quarter" (ARM)

From Dow Jones via Morningstar, November 5:

Arm says its rising revenue allows it to spend on research and development that helps meet growing customer demand

Arm's stock rose about 3.5% in after-hours trading Wednesday.

Shares of Arm Holdings PLC were climbing in Wednesday's extended session after the chip maker reported its third consecutive quarter of more than $1 billion in revenue.

The chip designer reported revenue of $1.14 billion for the second quarter of fiscal year 2026, reflecting a 34% increase from the year before, and topping estimates for $1.06 billion on FactSet. Its royalty revenue grew 21% from last year to $620 million, also topping the FactSet consensus for $587 million.

Arm (ARM) attributed growth in that segment, which includes the smartphone, data-center and automotive markets, to "continued adoption of Arm technology with higher royalty rates per chip," and higher uptake in data centers.

"In the data center, access to power has now become the bottleneck," which has fueled increased demand for Arm products, CEO Rene Haas said on the earnings call.

Meanwhile, Arm's licensing revenue was $515 million, representing 56% growth from the previous year.

"Demand for the Arm platform is strong as more leading companies signed high-value licenses for next-generation technologies," the company said in a shareholder letter.

Arm also delivered upbeat guidance for the current quarter, projecting $1.225 billion in revenue and 41 cents in adjusted earnings per share, whereas analysts were modeling $1.111 billion and 35 cents, respectively.... 

....MUCH MORE 

Here's the release from the company. 

"Nvidia Reportedly in Talks to Buy Arm From SoftBank for Over $32B"

This would go a long way toward dethroning Intel as Chipzilla.

Eric Savitz at Barron's:
Published: July 31, 2020 at 11:29 a.m. ET 

There’s growing chatter that the graphics chip giant Nvidia is taking a serious run at buying the U.K.-based semiconductor design company Arm Holdings from SoftBank Group, which had acquired Arm in 2016 for $32 billion.

Both the Financial Times and Bloomberg are reporting that the two companies are in talks about a deal that would bring SoftBank (ticker: 9984.Japan) more than its original purchase price for the company. Earlier this month, there were multiple reports that SoftBank was considering a sale or initial public offering for Arm, and there is reason to believe that an IPO could value the company north of $40 billion. This is the second round of reports suggesting Nvidia (NVDA) might be a buyer, and the new reports don’t add much detail.

SoftBank, Nvidia, and Arm have declined to comment on the reports.

Arm doesn’t manufacture or sell chips—instead, the company creates processor designs that it then licenses to companies like Nvidia, Marvell Technology Group (MRVL), Broadcom (AVGO), and others. Arm-based processors power 95% of the world’s mobile phones and tablets. The company also designs processors for PCs.

Apple (AAPL) recently announced plans to shift its Mac personal computers to internally designed Arm-based chips and away from Intel (INTC) processors. An Nvidia acquisition of Arm would almost certainly bring objections from other licensees who view Nvidia as a competitor.

In announcing the Arm acquisition in 2016, SoftBank CEO Masayoshi Son said he expected the company to become a key driver in the Internet of Things (IoT), a major focus for the $100 billion SoftBank Vision Fund, a venture-capital portfolio launched the same year. Last year, Arm CEO Simon Segars told me in an interview that Arm was likely to return to the public markets in 2023....

....MORE

Chips: "Nvidia’s latest earnings report is the ‘nail in the coffin’ for $40 billion ARM deal"—Susquehanna

From Yahoo Finance, November 19:

Nvidia’s (NVDA) $40 billion deal to purchase the U.K.-based chip developer ARM from SoftBank is all but dead. That’s at least what Susquehanna senior equity analyst Chris Rolland took away from Nvidia’s leadership during the company’s Q3 earnings call on Wednesday.

“I think some of the commentary [on Wednesday] kind of puts the final nail in the ARM coffin here,” Rolland told Yahoo Finance Live.

Nvidia initially made the $40 billion deal public in September 2020 with expectations that it would be finalized within 18 months, or the first quarter or 2022. During the company’s earnings call, however, it laid out the huge regulatory obstacles it needs to clear including enhanced regulatory scrutiny in the U.K, where ARM is based. The U.S., E.U., and China would also have to approve the deal.

"Regulators in the U.K. and the EU declined to approve the transaction in Phase 1 of their review processes, expressed numerous concerns, began a more in-depth Phase 2 review on the transaction’s impact on competition, and, in the UK, a Phase 2 review of the impact on the UK’s national security interests," the company said in a statement following its earnings report. 

"Although regulators and some ARM licensees have expressed concerns or objected to the transaction, we continue to believe in the merits and benefits of the acquisition to ARM, its licensees, and the industry."....

....MUCH MORE

Additionally, earlier in the week the FT was reporting:

UK announces national security probe of Nvidia’s $54bn Arm deal

The British government has launched an in-depth investigation into US chipmaker Nvidia’s takeover of the UK-based technology company Arm on national security grounds, throwing another hurdle in the path of the $54bn deal.

Digital and culture secretary Nadine Dorries has ordered a phase 2 investigation into the transaction on public interest grounds, meaning it will now be subject to a full-blown probe into antitrust and security issues. The UK competition watchdog uncovered “serious competition concerns” with the deal in July.

In a letter to the parties published on Tuesday, the government said: “The secretary of state believes that the ubiquity of Arm technology makes the accessibility and reliability of Arm IP necessary for national security.”.....MORE

I've been saying for years that the UK Department of Culture Media and Sport should have blocked the initial sale to Softbank:

May 2019
"SoftBank mulls IPO of $100 billion Vision Fund"

Crap. As we've said on these pages a few times, a cash crunch to force the re-listing of ARM Holdings would have been nice....

*****

....The RCEWA should have figured out how to designate ARM as an Object of Cultural Interest pursuant to the 2002 Export Control Act.
Or something.

Oh well, the RCEWA did keep T.L Lawrence's dagger in British Hands.

Or the Queen should have put the (dainty) Royal foot down. Or entered into a bidding war with Mr. Son. 

I mean if Charles can have high-profile commercial interests—Prince Charles reveals his car runs on cheese and wine ...— why can't his mom? 

Well, I guess she does, what with the Crown Estate, but at the moment the wind generation projects aren't bringing in the money, what with the wind drought and all.