Why is arm so difficult when neutrality is questioned and price increase opposed

On August 17, 2020, foreign media reported that NVIDIA, a well-known US chip company, was speeding up its acquisition of arm, a chip intellectual property licensing company, and both sides entered the exclusive negotiation stage. According to people familiar with the matter, arm’s valuation may reach 40 billion pounds, equivalent to about 52.4 billion dollars. < / P > < p > according to public data, arm is a technology giant in mobile terminals. More than 90% of mobile chips in the world use arm architecture, including processors from apple, Qualcomm, Huawei, Samsung, etc. < / P > < p > although there is no final conclusion on this acquisition, it is a big probability that NVIDIA successfully won. At that time, it will have a greater voice in the chip field. How can arm’s neutrality continue? More importantly, how does arm break through the ceiling dilemma? Chen Tingtao said that in the first quarter of 2020, it suffered a huge loss of 94.6 billion yuan, the first loss since its listing. However, in the second quarter, it made a profit of 82.6 billion yuan. In a short quarter, it staged a counter attack of turning the corner. “In the second quarter, most of the world’s major stock markets had valuations to repair the market, especially the momentum of technology stocks. In addition, it also had a large-scale investment of 4.5 trillion yen with Softbank The sale plan has a lot to do with it. ” < p > < p > after tasting the sweetness, sun Zhengyi, chairman and CEO of Softbank, has quietly changed his attitude towards arm, which cost US $32 billion in 2016. Prior to this, sun Zhengyi said publicly: “we are in the process of negotiation and consider the possibility of re listing during the negotiation. In addition, we also consider selling arm in part or in whole. ” < / P > < p > “as the epidemic is still spreading, there is still uncertainty about Softbank’s future profits.” The reason is that sun Zhengyi is still cautious, “every day is like fighting a war. For us, cash is our fortification. ” < / P > < p > on the one hand, if NVIDIA uses arm to make up for its shortcomings in the mobile terminal and returns to the mobile chip market, the latter’s neutrality may be challenged. After all, it relies on selling arm architecture to survive. Most of the companies that have obtained the license will become NVIDIA’s competitors. Therefore, the competitors will inevitably have concerns about whether they will be treated differently. According to the public information of arm, arm has more than 200 partners in China and sold more than 16 billion chips based on arm structure. < / P > < p > “this means that once the situation changes, or becomes bigger and stronger, the possibility of domestic IC companies not getting arm authorization increases sharply.” Chen Tingtao said. < / P > < p > according to Softbank’s financial report data, arm’s operating revenue from 2017 to 2019 is US $1831 billion, US $1.836 billion and US $1.898 billion, with a year-on-year growth rate of no more than 4%. < p > < p > venture capitalist vesting told zinc scale arm that it was in the dilemma of stagnant operating income: “as a technology company, you can lose money or negative cash flow, but you must show the company’s growth. The capital market prefers sexy high growth companies, while arm’s tiny growth rate is difficult to please the capital market. This may be why Sun Zhengyi did not force IPO For one thing. ” < p > < p > when arm is saturated in the mobile terminal, it will focus on the desktop and server, which is the basic disk of Intel, and is also regarded as the next performance growth pole of arm. < / P > < p > “there was a period of time when arm was so powerful that it seemed that breaking the monopoly of X86 in PC was just around the corner. However, in fact, the progress was slow. First, although its performance was constantly improving, there was still a certain gap with Intel. Secondly, without revolutionary technology, it was difficult to subvert a mature PC ecosystem. In other words, arm still faced severe challenges.” One person familiar with the matter said. < / P > < p > arm’s revenue mainly consists of two parts: one is the initial licensing fee, such as Huawei’s arm V8 permanent license; the other is royalty, which means that every chip based on ARM architecture has to pay a certain fee. In 2019, arm collected a total of US $102 million in royalties from 640 million chips, with an average of $0.16 per chip. The market scale of arm architecture chip has been enlarged, but arm company has not directly absorbed much nutrients from it, and the coverage of IC company is limited after all, and the ceiling of franchise fee is obvious. < p > < p > in this regard, arm is also well aware of this. According to foreign media reports, arm recently requested to increase royalties, and the royalties of some customers may be increased by as much as four times, and they are eager to solve the problem of stagnant operating income from the left hand of royalty. < / P > < p > “the imagination space of royalty income is quite large, but the actual potential is not optimistic, and the industry generally shows dissatisfaction.” Vesting believes that arm’s price raising road will not be smooth. “The mobile terminal chip market is actually dominated by a few giants such as apple, Samsung, Qualcomm, Huawei, and MediaTek. They have strong bargaining power, but how much oil can small and medium-sized enterprises squeeze out? Also, can the price increase last? If not, the problem has not been fundamentally solved. ” In fact, most of the small and medium-sized chip companies in China are not well-off at the beginning, and arm lion’s mouth is open, which may make the survival of the above-mentioned companies more difficult. < / P > < p > “risc-v was developed under the leadership of Professor David parteson, who won the Turing Award. It has no problem in leading technology. The purpose of risc-v is to make hardware development not be monopolized by large commercial companies like open source software.” A snowball investor said publicly that risc-v has the characteristics of new architecture, open source and fast response. < / P > < p > and David Patterson said in a media interview in April 2020: “just as Linux today is a strong competitor to proprietary operating systems, I hope that the open risc-v architecture will become a very strong competitor to proprietary architectures in the next five years.” < / P > < p > a market person said: “both x86 and arm have too many patents, and it is difficult for Chinese people to bypass them. Therefore, it is the best policy to embrace risc-v. at present, Huawei Hisilicon, Ziguang zhanrui and Alibaba all cut into the track for layout. Relying on the support of the Chinese market, it may be possible to compete with X86 and arm in the future.” According to the report, the number of risc-v chips will increase to 62.4 billion by 2025, with a compound growth rate of 146% from 2018 to 2025. These chips will be mainly used in industrial market, PC, consumer electronics and communication market. < p > < p > Tan Zhangxi, founder of Ruisi core technology, also agrees with this view: “in the past, in China, there were many manufacturers who bought IP for packaging and solutions, but very few were able to independently develop IP and complete the design of underlying processors. Based on risc-v, this is likely to change. ” However, risc-v still has some shortcomings: first, technical problems such as security and fragmentation still need to be improved; second, the ecology is still in its infancy and cannot be compared with the mature x86 and arm ecology, which needs time to accumulate and break through. According to Zhongke Shuguang’s 2020 interim report, it purchased 46362000 yuan of chips from Loongson, compared with 396500 yuan in the same period last year. It is expected to purchase 300 million yuan in the whole year. In fact, the annual revenue of Loongson in 2017 is only 150 million yuan. < p > < p > A-share professional investor Li Yuanhai told the zinc scale: “there is no change in the C-end of the Loongson, and the exploration in the b-end is relatively slow, but it is more prominent in the a-end.” Continue ReadingStraight screen S20! Samsung Galaxy S20 Fe exposure: 1Hz high brush + snapdragon 865