12/03/2009
TheStreet.com
Intel(INTC Quote) will have no choice but to buy ARM Holdings(AIG Quote).
The first reason is that ARM controls the market for smartphone processors, and Intel won’t be able to knock it off that perch.
ARM CEO Warren East said the other day in an interview, “I’m sure that Intel are going to get their Atom designed into a few handsets, it’s an inevitability. They go on their hands and knees. There will be a little bit of leakage, but it’s not going to be dramatic either way.”
I wholeheartedly agree. Intel will get some design wins, primarily from Nokia(NOK Quote), but ARM continues to make advanced processors, and there are too many leading semiconductor companies licensing its products for Intel to make inroads.
Remember that ARM owns the mobile Internet device (MID) space. It owns 95% of the mobile phone market and 85% of the smartphone market in unit shipments. ARM processors are being manufactured in the best semiconductor facilities.
Also remember that ARM has a very long list of current and former licensees: Alcatel(ALU Quote), Atmel(ATML Quote), Broadcom(BRCM Quote), Cirrus Logic(CRUS Quote), Digital Equipment Corp., Freescale, Intel (through DEC), LG Group, Marvell Technology Group(MRVL Quote), NEC, NVIDIA(NVDA Quote), NXP (previously Philips), Oki, Qualcomm(QCOM Quote), Samsung, Sharp, ST Microelectronics(STM Quote), Symbios Logic,Texas Instruments(TXN Quote),VLSI Technology, Yamaha, ZiiLABS and, oh yes, Taiwan Semiconductor Manufacturing(TSM Quote).
ARM CEO East also said, “I don’t think ARM is going to take over the PC world from Intel, and I don’t think Intel is going to take the smartphone world from ARM.”
I disagree and think he’s just being humble, and this brings us to the second reason I think Intel will have to acquire ARM.
In a September article for TheStreet.com, I wrote that ARM will gain 55% of the netbook and smartbook market in 2012, the other sector where Intel’s Atom processors compete with ARM processors.
Why did I make such a controversial statement?
Analyzing these markets for the past 25 years has given me insight. And I can’t look past the promise of Google’s(GOOG Quote) Chrome and cloud computing as avenues to ARM’s success. In fact, new evidence is reinforcing my prognostications.
According to a Nov. 24 article in PC Magazine, “Although it’s not really known what the percentage of netbooks running Linux is, the number may have increased. In April, Microsoft(MSFT Quote) cited NPD studies that claimed just 4% of netbooks in the U.S. ran a non-Microsoft operating system. But ABI Research claimed in November that about one-third of all netbooks shipping globally this year will contain Linux or some other non-Microsoft OS.”
So, not only will ARM continue to dominate the mobile-phone market, it will eventually lead the netbook market, too. Intel should pay attention and buy ARM.
