ARM wrestling with Intel!

Matt Scherer, Databeans

RENO, USA: As one of the main beneficiaries of the smartphone revolution, the Microcontroller industry is poised to witness major growth in the upcoming year as embedded processing demands continue to increase.

Databeans projects that the global Microcontroller market will reach $16.1 billion in 2011, an increase of 9 percent from 2010. Perhaps no one firm benefitted from the continued growth of the MCU market more than ARM Holdings, the UK-based developer and key license holder of the ARM 32-Bit RISC instruction set architecture (ISA). The firm doesn’t even sell chips, but rather establishes base chip designs and receives income from the licenses and then royalties on the end products.

But now that the architecture is almost completely ubiquitous in the embedded market, and thanks to ramping handset complexity and new market penetration, ARM’s popularity has exploded. The company’s share price has increased by over 600 percent over the past two years as the number of licensees continues to escalate to 743, up 35 during the fourth quarter of 2010.

Nineteen of these new licenses were for ARM’s Cortex processors, including eight new licenses where ARM technology is being used by a new customer or within a new product line of an existing customer. Another eight of which were specifically for ARM’s advanced Mali graphics processors found in smartphones, digital TVs, and mobile computers.

In particular, shipments of ARM-processor based microcontrollers grew at a record pace of over 100 percent during the 2010 year, compared to about 37 percent growth for the overall microcontroller market. Most of this growth was attributed by an increase in sales of its Cortex-M family based chips which now comprise about 10 percent of total ARM shipments.

ARM’s customers, who range from TI to Samsung to Nvidia, reported roughly a 30 percent year-over-year increase in shipments of chips for the mobile segment in Q4 2010, driven by a doubling in smartphone shipments.

According to internal company estimates, ARM had a greater than 95 percent unit shipment share in the smartphone market in the year 2010. ARM-based products also had a 35 percent market share in digital TVs and set-top boxes by the end of 2010. And while the firm currently has zero market penetration in servers and desktop PCs, it hopes to change this going into 2011.

First was the big news that Microsoft would pledge support for the ARM architecture. Then came the announcement that Nvidia would start integrating the Cortex-A15 ARM cores into high performance workstations and servers containing clusters of multi-core ARM chips. Perhaps most significantly, with ARM now entering the mobile computing space, the little firm now poses a direct challenge with Intel. Time will tell if this will be a success, but ARM’s strengths, including its uniquely strong ecosystem, with its universality and amount of diverse partnerships, may be the key to its eventual success.

Looking into the future, the ARM Company estimates that by 2015 the royalty opportunity for ARM-based chips using its Cortex-A CPU and related Mali graphics chips in the field of application processing (including mobile computing, smartphones, servers, and PCs) will reach 4 billion units.

Also, according to ARM by 2015 the real-time embedded chip space will represent another 12 billion units in potential and will be targeted by its Cortex-R family, with another 18 billion units addressable with its Cortex-M designs for microcontrollers.