Not one to rest on its laurels, Silicon Fen success story ARM - which designs the super-efficient microprocessors at the heart of 95% of the world’s smartphones - has come up with a brand new range of super high performance chips intended to consolidate its lead.
The top of the range Cortex A72 processor will be in mobiles and phablets from next year and may prove to be all the computing power that most people need. 3.5x as powerful and using 75% less power than ARM’s own designs of only a year or two ago, A72 powered devices could decimate what’s left of the PC and laptop market. 10 licencees - including Taiwanese chipmaker Mediatek - have already signed up.
What’s more, the new chips are good enough to potentially find their way into network infrastructure, the very bowels of the internet itself.
Why is this important? Well for starters toting such a gadget would be, as one commentator put it, ‘Like carrying a data centre in your pocket’. Guaranteed to appeal to phone nerds everywhere, such high performance devices could kickstart a new wave of smartphone development and address worries that ARM’s core mobile market is running out of steam.
Because despite the iPhone 6’s phenomenal success, the rise of new budget devices from the likes of Chinese outfit Xiaomi means shrinking royalties for ARM. Royalties grew 9% in the last quarter of 2014 to $320.2m, down 4% year on year.
And secondly, because the big chip beasts like US giant Intel have traditionally had the so-called ‘server class’ processor market to themselves. Providing the backbone of global networks requires speed and capacity above all else - price and power consumption have been secondary considerations. So server chips are the Rolls-Royces of the processor world, and come with a similarly juicy margin baked in for the manufacturers.
Until now. ARM’s new chip range has the potential to start making inroads at the lower end of this uniquely lucrative market, earning new revenues and customers for ARM whilst offering ‘good enough’ performance at an attractive price, and very low energy consumption for added greenie points. What’s not to like about that?
ARM boss Simon Segars may also be hoping that a new wave of growth could push up the shareprice and make the company a less attractive takeover target. Hardly a week passes in the City without rumours of another bid for ARM in the offing, and a break form the distraction would probably be most welcome.