Arm Holdings Ltd. is gearing up to go public once again, announcing their plans for an initial public offering scheduled for next month. However, as the chip designer owned by SoftBank Group Corp. prepares to make its debut, it must face a potential threat that has recently emerged.
Arm is renowned for developing chip designs known as RISC (reduced instruction set computing) processors. However, a formidable rival in the form of the RISC-V Foundation, an open-source architecture group, now poses a direct challenge to Arm’s licensing business model.
The perceived risk posed by the RISC-V Foundation is not lost on Arm, as reflected in their recently filed prospectus. In the “risk factors” section of this document, Arm concedes, “If RISC-V-related technology continues to be developed and market support for RISC-V increases, our customers may choose to utilize this free, open-source architecture instead of our products.”
Arm’s concerns are not unfounded. Just earlier this month, one of its major customers, Qualcomm Inc., joined forces with four other semiconductor companies to support RISC-V. These companies, including Infineon Technologies, NXP Semiconductors, Robert Bosch, and Nordic Semiconductor, are even investing in a company dedicated to driving the adoption of RISC-V and developing commercial products based on this open-source architecture.
Notably, this alliance among Arm’s industry counterparts was explicitly mentioned in Arm’s regulatory filing.
During a recent JPMorgan tech conference, Qualcomm’s Chief Financial Officer Akash Palkhiwala also shared insights into the company’s stance on RISC-V.
It remains to be seen how Arm Holdings will navigate the challenges posed by the growing popularity of RISC-V, and whether they can maintain their dominance in the chip design industry. As the countdown to their IPO begins, Arm must strategize and innovate to secure its position in an increasingly competitive landscape.
RISC-V Cores: A Promising Opportunity for Phones
In the world of mobile technology, there may be a significant opportunity for RISC-V cores to gain widespread usage in phones, according to Palkhiwala, a prominent figure in the industry. Although RISC-V is currently utilized in phone components like audio and video processors, the potential for its broader implementation is becoming increasingly evident.
Notably, Qualcomm, a major player in the market representing 11% of Arm’s revenue in fiscal 2023, is currently embroiled in a legal dispute with Arm. This dispute adds an additional layer of complexity to the future prospects of RISC-V.
Moreover, various AI chip startups are also turning their attention to the RISC-V architecture for chip development. Tenstorrent, founded by Jim Keller—an esteemed processor engineer previously associated with DEC, AMD, and Apple—emphasizes RISC-V in its work.
As more companies consider developing chips in-house for their data centers, particularly those dedicated to AI operations, RISC-V could potentially gain traction in that field as well. However, Arm is not being complacent and is actively targeting that market as well. Each new generation of Arm processors is specifically designed to enhance crucial components of algorithms utilized in future AI applications.
When SoftBank eventually launches U.K.-based Arm as an independent public company, it is anticipated to significantly impact the underwhelming IPO market. Nevertheless, potential investors captivated by the allure of an AI-focused offering should be aware of the fierce competition that Arm faces.
