What is ARM? What exactly it does do? Not a well-known name, but how it is a super important player in the semiconductor chip supply chain?
ARM (prev. Advanced RISC Machine)
Arm designs architecture for CPUs. These designs are then used by chip makers like TSMC, and Samsung, as well as chip designers like Apple, Nvidia, and Intel. As Arm’s CEO Rene Haas says – “We don’t build chips but license the brains to someone else who will”. Essentially, it provides intellectual property.
How does it earn?
Arm has two revenue sources – licenses and royalties. A company that wants to design its products based on the Arm’s architecture has to pay an initial cost for licensing. If the designed product has to be productized to sell to the end customers, Arm charges them royalties per product sold.
How significant is Arm in the semiconductor chip supply chain?
99% of the total smartphones sold have Arm-based processors. So pretty much each of the phones that we see around us is powered by Arm. With more than 250 billion chips sold, the company highlights that 70% of the world’s population are using Arm-based devices. So imagine phones, laptops, gaming consoles, and consumer electronics devices that we see around, and fairly assume they are using Arm. It has emerged as a leader in the emerging market of IoT where Arm powers 90% of IoT chips.
Arm is unarguably one of the most important tech companies in today’s world.
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