Thursday, August 4, 2011

Apple Strength Will Compel ARM to Trim its Sails

Published on
08-03-2011 04:00 PM

ARM's move into the broad Tablet and PC space is based on lining up as many partners as possible to attack Intel from multiple angles. It’s a strategy not so different from what Intel employed in the early PC days. However, the strategy is unraveling as Apple and Samsung have reached market share domination without ARM’s merchant partners. The end game is still playing out as partnerships and alliances continue to form. The long term impact on ARM will be slowing revenue and earnings growth...

The final piece to Apple’s strategy is to arrange a nice marriage between Qualcomm and Intel for the benefit of just Apple. Apple will demand that Intel run Qualcomm silicon in their fabs to get maximum performance at lowest power and cost. The Qualcomm silicon will be used for iPhones and Tablets in some die-stacking package. Getting CPU and Communications silicon cost down is key to their long term battle with Samsnug. ARM wins in the Tablet and iPhone wars hanging on Apple’s coattails but it is less of a win than if the merchant players were all in the game.

Intel wins in Tablets and iPhone business through expanded foundry business for Apple that includes building ARM chips for iphone and ARM + x86 combo CPUs for Tablets and MAC Air notebooks. Add on to that the Qualcomm foundry business and it is a significant revenue upside. Qualcomm may have the option of increasing their business with Intel Foundry – for the purpose of selling chips into Samsung, HTC, and Nokia etc… As a long time participant in the mobile PC business, it is the shifting alliances that will be the most fun to watch over the next two years.

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