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Top Chip Designing Firm Arm Produces Its Own Sophisticated Semiconductor Prototypes

Top Chip Designing Firm Arm Produces Its Own Sophisticated Semiconductor Prototypes
Chip designer Arm, a SoftBank-owned company, is creating its own chip to demonstrate the possibilities of its designs as it looks to expand after a successful IPO later this year.
According to those briefed on the development, the corporation will collaborate with manufacturing partners to produce the new chip. They describe it as the most sophisticated chipmaking endeavour the Cambridge-based organisation has ever undergone.
The initiative comes as SoftBank works to increase Arm's profits and draw investors to a planned IPO on the Nasdaq exchange in New York.
Instead of engaging directly in the design and production of semiconductors, the corporation typically sells its blueprint designs to chip manufacturers.
It is hoped that the prototype will enable it to show the larger market the strength and potential of its concepts.
With partners like Samsung and Taiwan Semiconductor Manufacturing Co., Arm has previously created several test chips, mostly to help software developers become more familiar with new products.
However, other business leaders told the Financial Times that the company's most recent chip, on which it only recently began working, is "more advanced" than anything else. According to them, Arm has also assembled a larger team to carry out the project and is concentrating on chip manufacturers rather than software developers while developing the product.
According to insiders briefed on the plan, the business has established a new "solutions engineering" team that will oversee the development of these prototype processors for mobile phones, laptops, and other electronics.
Veteran of the chip business Kevork Kechichian, who joined Arm's top executive team in February, is in charge of the solutions engineering division. Prior to joining Qualcomm, he worked with chipmakers NXP Semiconductors and NXP Semiconductors, where he oversaw the creation of Qualcomm's flagship Snapdragon processor.
The group will also broaden Arm's current initiatives to improve design performance and security and to increase developer access to its devices.
Rumours regarding Arm's chip-making activities have raised concerns in the semiconductor industry that, if it produces a high-quality chip, it may try to sell it in the future and so challenge some of its biggest clients, like MediaTek or Qualcomm.
According to those close to Arm, the company is just developing a prototype and has no ambitions to market or licence the product. Arm choose not to respond.
Any attempt to produce chips for wider commercial distribution would jeopardise Arm's status as the "Switzerland" of the semiconductor sector, selling designs to virtually all manufacturers of mobile device chips without engaging in direct competition with them.
More than 95% of smartphones contain its goods thanks to its impartial business approach, which has attracted clients including Qualcomm, MediaTek, and Apple.
“Working on intellectual property is one thing but really designing and working with production partners to turn those efforts into physical chips is a totally different arena. It’s more capital intensive,” a former Arm executive with knowledge of the effort told the FT. “At some point in the future [Arm] will definitely need returns to justify that massive investment.”
SoftBank's drive for expansion has prompted Arm to look for modifications to its business procedures. The FT revealed last month that the chip designer has attempted to raise pricing and change its business model by charging royalties to device-makers rather than some of its chipmaker clients.
The "significant concentration" of Arm's customer base was identified as a major risk to the business in its annual report, which was released last week. The loss of a few large clients might have a big impact on the group's expansion because Arm's top 20 clients made up 86% of its income last year.
When Arm issued that warning, it was in the midst of a contentious legal battle with Qualcomm, one of its biggest clients, over Qualcomm's alleged exploitation of several of Arm's designs without the proper authorization.
A major worry in the market is that Apple, Arm's biggest client, is producing its own processors that surpass those of rival manufacturers Qualcomm and MediaTek.
“Google thought it could demonstrate the world’s best Android OS so it built the Pixel phone. Microsoft thought it was the master of Windows so it built Surface laptops. So, naturally, Arm thinks it can build best-in-class Arm-based chips, better than chip developers out there,” said Brady Wang, a semiconductor analyst with Counterpoint Research.
But according to Wang, creating chips is even more difficult than creating gadgets. "Generation after generation of development efforts will be required."

Christopher J. Mitchell

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