Digitimes recently had the opportunity to talk with Simon Segars, executive VP and GM of ARM's physical IP division, about market trends and development, and how ARM responds to changing industry dynamics.
Q: More system vendors are looking to develop their own core processors for their products chips, following the business models of Apple and Samsung Electronics. How do you see this trend?
A: Indeed, there are more brand-name firms and OS providers looking to exercise vertical or horizontal integration. Doing so, they have to be engaged in every step of the chip-making process including design, manufacture, packaging and testing, as well as software/firmware development. Each of these areas have their own specialty, and have been going through stages of technological evolution.
Many brand-name vendors and OS firms have expressed interest in getting themselves involved in the upstream supply chain, but in the short term, they are mostly observing and building understanding rather than acting, i.e., going farther upstream in the supply chain. ARM is closely observing company behaviors and industry dynamics, and our customers.
For now ARM believes that a division of work between companies at different tiers of the supply chain is still a major trend in the semiconductor industry. It is unlikely we will see any change in downstream customers' demand impact the currently-mainstream supply chain paradigm.
Q: What changes you have seen recently in the North America, Taiwan and China IC design industries?
A: In North America, the IC design sector is undergoing continuing consolidation. Several world-class companies have emerged following a series of mergers and acquisitions, with most of them enjoying leadership positions in their specialized markets.
Development in Taiwan is a different story. The number of Taiwan-based fabless IC firms is similar to the level 10 years ago. Among them, first-tier players such as MediaTek and MStar Semiconductor have been improving their design capabilities at a fast pace and are able to be competitive with international standards. The remainder, however, continue to run small-scale businesses.
As for China's IC design industry, development is still in a planning stage. Local governments in China have launched a number of strategic policies to increase the number of domestic IC designers and accelerate the development of China's local industry. Several China-based firms including Spreadtrum and HiSilicon have emerged to play in the global marketplace. With China's huge domestic market constantly expanding, the local IC design industry will be growing at a faster rate in the future.
But after all, companies in every sector are all being affected by globalization and international competition. Only those able to produce competitive solutions can win market share.
Q: What contributions has ARM – as the world's largest chip IP licensor – made to the semiconductor industry?
A: We "democratize" the global processor market. ARM has built a win-win business relationship model with our customers in which the two sides allocate risks and share profits.
By licensing ARM's CPU architecture, companies are able to customize their designs and reduce the time-to-market when they enter a system-on-chip (SoC) era. Every company including downstream device makers now can develop their own microprocessor designs based on the ARM architecture.
When our customers generate earnings, ARM can make money through licensing. The more chips they sell the more money we make. At the same time, we have risks of not generating profits when their products fail.
ARM's strategy toward its licensees has been effective, and over the past several years we have attracted a number of more innovative, creative and adventurous companies to use ARM-based CPU cores for their next-generation designs. ARM has therefore built its economies of scale.
This interview was translated from Chinese.
Simon Segars, executive VP and GM of ARM's physical IP division
Photo: Cage Chao, Digitimes, June 2012
Article translated by Jessie Shen
