The ARM Diaries, Part 1: How ARM’s Business Model Works
by Anand Lal Shimpi on June 28, 2013 12:06 AM EST
It must frustrate ARM just how much attention is given to Intel in the ultra mobile space, especially considering the chip giant’s effectively non-existent market share. Since 2008 Intel has tried, year after year, to break into smartphones and tablets with very limited success. Despite having the IP and technical know-how to do so, it wasn’t until 2012 that we saw Intel act like a company with even a sliver of a chance. Today, things are finally starting to change. Intel’s 22nm SoC process and updated Atom microarchitecture look very competitive, and we’ll see the first tablet products based on them later this year - with phones following sometime in early 2014. As Intel is about to start acting like a competitor, ARM is starting to talk a lot more about its magic.
We’ve had well over a decade of Intel sharing its beliefs with us, but this is ARM’s first attempt at doing the same. What will follow over the next few posts are a bunch of disclosures, some related some not, attempting to bring everyone up to speed on where ARM is today and where ARM will be in the near future. The best place to start is with ARM’s business model.
In the PC industry, the concept of a fabless semiconductor manufacturer isn’t unusual. NVIDIA has always been one, and now AMD is one as well. Fabless semiconductors create all of the designs for their chips, but they’re physically manufactured at a foundry partner (e.g. TSMC, Global Foundries, Samsung). The fabless semi approach greatly helps reduce costs, but your designs are ultimately at the mercy of your foundry partner. Capacity, quality of process and timeline for process are more or less out of your control. Sometimes this is a non-issue, but other times it dramatically impacts your ability to bring products to market (e.g. quality control for early TSMC 40nm, timeline for GF 28nm or early capacity for TSMC 28nm).
ARM goes one step beyond the fabless semi: it doesn’t even sell any chips into the marketplace. ARM instead, designs IP (instruction set architecture, microprocessor, graphics, interconnects) and licenses it to anyone who wants to use it. ARM’s customers will then take the IP they’ve licensed and design it into silicon. These customers can be fabless semiconductor companies or companies that own fabs.
It’s a very unique business model, especially if you compare it to that of the market share leader in the PC silicon space (Intel). From Intel’s perspective, it made the mistake of licensing the x86 ISA early on in its life, but quickly retreated from that business. It instead builds its own architectures, designs them into chips for various markets, and manufactures the designs at its own foundries. Intel is a truly vertically integrated chip design and fabrication house. It’s a lot of work, but Intel is rewarded by having extremely high margins on all of its products.
The ultra mobile world is very different, at least today. In the PC world, Intel drives platform definition and ends up being the biggest part of the BoM (Bill of Materials) as a result. In smartphones and tablets, the main applications processor is easily under 10% of the cost of the device. More often than not, we’re talking about low single digit percentages of the total BoM (e.g. $15 SoC for a $400 device, or 3.75%). Intel’s theory is that this will eventually change as silicon complexity increases inside ultra mobile devices, but until now (and likely for the near future) the market requires/enables a different sort of business model.
How ARM Works
The ARM business model is incredibly simple to understand, it’s just different than what we’re used to in the PC space. At a high level, ARM offers three different types of licenses: POP, processor and architecture.
A processor license is the license to use a microprocessor or GPU that ARM has designed. You can’t really change the design, but you get to implement it however you’d like. For example, Samsung’s Exynos 5 Octa implements four ARM Cortex A7 cores and four ARM Cortex A15 cores - these are processor licenses. ARM will provide guidelines as to how to implement these designs in silicon, but ultimately it’s up to you and your physical implementation teams to do so and get good frequency/power out of your design.
A processor optimization pack (POP), takes a processor license to the next level. If you aren’t great at physical implementations, ARM will sell you an optimized processor design that you can take and manufacture at a specific foundry which will result in some degree of guaranteed performance. If you look at what happened with the Cortex A8, Apple and Samsung had their own physical implementations of the core that resulted in better frequency/power than a lot of other designs. Apple and Samsung had access to Intrinsity who hardened the Cortex A8 design, but not all companies had the bandwidth/budget to do the same. POPs are ARM’s equivalent solution for those customers who need very good implementations but can’t do so by themselves. POPs are available for various processor/foundry/process node combinations. For example, ARM offers a 28nm HPM POP at TSMC for the Cortex A12.
The final option is an architecture license. Here, ARM would license you one of its architectures (e.g. ARMv7, ARMv8) and you’re free to take that architecture and implement it however you’d like. This is what Qualcomm does to build Krait, and what Apple did to build Swift. These microprocessors are ISA compatible with ARM’s Cortex A15 for example, but they are their own implementations of the ARM ISA. Here you basically get a book and a bunch of tests to verify compliance with the ARM ISA you’re implementing. ARM will offer some support to help you with your design, but it’s ultimately up to you to design, implement and validate your own microprocessor design.
In terms of numbers, ARM has around 1000 licenses in the market spread across 320 licensees/partners. Of those 320 licensees, only 15 of them have architecture licenses.
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Wolfpup - Friday, June 28, 2013 - link
8.7 billion chips in one year...that's mind blowing :-O And of course isn't even counting all the multiple CPUs in many chips.I guess I should really be supportive of what they do, given their model is probably healthier than Intel's, but I'm still biased against ARM because of how low end their stuff is (not to mention that it's never been used in a really great PC before...I suppose since Android is technically open it could be considered a PC, but...yuck).
Qwertilot - Friday, June 28, 2013 - link
Not never - they did start out in very decent computers. Not for a long while of course. Wonder if we'll ever see arm linux devices in any sorts of real numbers.dealcorn - Friday, June 28, 2013 - link
As Android is branded linux, I think we are already there. The open source community is very supportive of ARM on Linux, but products available in the marketplace generally lack contemporary ARM chips at affordable prices. Linux clearly works on select non cutting edge ARM products such as the Rasberry Pi, but the performance falls short of mainstream appeal.Qwertilot - Friday, June 28, 2013 - link
That's the main issue I guess. I guess that (seemingly very popular) Samsung chrome book might be closest to counting. Suppose its mostly whether anyone bothers putting a workable thing together, all the interfaces you'd like on the SoC etc.ShieTar - Friday, June 28, 2013 - link
Sir, for the atrocity of calling the ACORN "not a really great PC" I will have to formally demand satisfaction from you! I propose we meet at the break of dawn, and duel by throwing Monkey Island style insults from 20 feet distance!The truth is, while Black-Hat-White-Hat thinking is fun in terms of you favorite electronic implementation of the overcomplicated abacus, its never been very relevant for my own decisions in reality. I've grown up an absolute Commodore addict, both on the C64 and the AMIGA, only leaving an Apple IIe in for a bit of latenight-programming (The commodores were connected to the family TV, the Apple had a tiny monochrome monitor and was firmly located inside my own room). But once I joined university (College for you US guys) and I needed a cost-efficient platform for simulations and LaTeX-editing, I've jumped over to the PC-platform quickly enough. And about 3 month after grudgingly admiting this "Wintel"-Thing into my home, I tremendously enjoyed myself playing Starcraft.
Of course I still yell "AMIGA 4 Life" at anybody who proposes I use an Apple instead of an IBM compatible for my PC needs. Which confuses the hell out of everybody, but luckily building a satellite takes 5-10 years, so the team has pleanty of time to get used to my antics.
Still, when some new platform comes around that can do what I need to be done, I will end up buying it. I will complain, I will point out to people that "The Cloud" is really just FTP with a better front-end, and I will yell "AMIGA 4 Life" from time to time. I may be affected by PC-Tourette.
So, when it comes to ARM, I'm just about to earn them annother 0.4$. I went to our local tech-search-engine (http://www.heise.de/preisvergleich for those not scared of german) and figured out that of the 933 tablets sold in germany, there is exactly one that offers a 10 inch screen at a weight of 320g, with everything else starting at around 500g. Now I personnally have exactly 2 tasks which really require me to own a table: I need something to read comics without killing trees, which my Kindle won't really do due to a lack of pictures and colours. And I sometimes need a map when I visit a city which is not the one I live in. For both tasks, the exact kind of processor does hardly matter. The screen resolution is a point, but not critical. Cameras are irrelevant. SD-Cards are nice, but not critical. And so on. So while the majority of tech-sites goes on to discuss Apple vs. Samsung vs. Asus vs. I'm not sure what else, I will go and by myself a "Cube U30GT". I don't know anybody who owns one, I have never read a review from a credible site recomending one, but I know how to use a search engine, and this thing turns up as the best thing for my exact needs.
To come back to the point:
Intel engineering is probably "better" than ARM, but I will buy an ARM device next.
Apple and ASUS are VERY likely better overall designers of tablets than Cube (If that is even the company name), but I will buy a Cube product next.
I have a specific need, so I will buy a specific product.
Mmh, and while on the subject, a somewhat random but remotely relevant comment on your post, Mister Wolfpup: "Long-Forgotten Guy from Sumeria" has found and refined the grain of wheat, of which we now trade 650 million tons each year (whatever that means in actual number of corns. 650 trillion corns? Maybe.)
So, my point? Stop obsessing who is best, or most relevant, and let your voice be heard on what you want and need. This is how we progress, by understanding the needs of people and the capabilities of science and engineering. Random comments on "I won't buy your stuff because people don't buy your stuff" don't really progress anything.
So, while we're at it: I want a 200g ASUS-Infinity-Tablet to go on a Keyboard-Dock. And I want that dock to have a big battery and a decent 2.5" SSD included, and nice mechanical keys and a decent number of USB-ports.
Thanks.
hazydave - Tuesday, July 2, 2013 - link
Nice to read the Amiga love... but keep in mind, real Amiga development at Commodore pretty much stopped in 1993, given the troubles with mismanagement and other crimes. The great effect of the x86-PC was democratizing the personal computer, at least at the system level. Anyone could (and can) build their own. Heck, even Apple's Macintosh evolved into a bog standard PC.ARM has managed to take that to the next level, by basically doing the same thing for chip designers that Intel and AMD and the huge industry behind them did for system integrators. I doubt that Amiga would have gone x86 in 1994, had Commodore been healthy, but it would have moved off 68K, that's for certain -- the successor to the Amiga 3000/4000 architecture was CPU neutral at the system level, and the custom chips were headed that way as well. But certainly, had things lasted, the Amiga would be x86 today. And maybe looking at ARM versions as well.
I actually feel a little better about running Android on my Galaxy Nexus or Asus Transformer Infinity (128GB total storage... plenty for Android, you don't really need a larger SSD) than Windows 7 on my "home made" PC. Microsoft WAS the Evil Empire; I'm pretty sure they're still Evil, but not sure about the whole Empire thing anymore. ARM, Asus, Linux and Google... much less so.
But at the end of the day, you have stuff to do on that PC. I took me a little while to figure out the whole retro-computing thing, but it's the basic idea that, in the early home computer days, certainly when the C64 and Amiga first shipped, the computer WAS your hobby. You bought a computer to "do computing"... probably writing some code, sure, some store-bought programs as well, but the central focus was that computer.
That hasn't been the case for ages, though. Unless you're buying a Raspberry Pi or some-such, you're probably buying a PC as an engine for something else: web entre, CAD, music, video, gaming, office automation, etc. A few are still coding, of course, but even that's probably more about a specific project than learning every tiny detail of a specific bit of hardware and code. The PC itself is an easily replaceable part. And I think, at least in part, if you're nostalgic for Commodores or Amigas or Apple ][s, you're missing that bit of "soul" that emerged in exploring those machines' depths.
mali_07 - Friday, June 28, 2013 - link
Intel's brand new haswell benchmarked against A9 which has been in Market for like 3 years that too on Intel optimized platform giving misleading data. Can Intel now dare to benchmark it against Cortex A12 which is 30% faster than A15.What about A50 series which will be 3x faster than present series of Cortex. Intel only has survived owing to its money which it uses in ads through you guys.
ARM infact is one generation ahead of INTEL.
name99 - Friday, June 28, 2013 - link
Oh for crying out loud.ShieTar - Friday, June 28, 2013 - link
You need to be more vocal and explicit in your responses. I have extracted almost no amusement at all from your response. I suggest you go ahead and outright call this person an Idiot. Or go for Imbecile, he seems to have problems to count to 15 anyways. Or maybe you want to go and make my day and declare him a "Cortex-loving son of an ARM-brained RISC-lover"Seriously, Kids today just don't know how to start a serious riot anymore.
zifuxyx - Friday, June 28, 2013 - link
arm will finally defeat by intelit is no reason to doubt, just about the time
in 1 or 2 years ?