A couple of years ago, we talked to the people who run HDMI, which is the industry standard for how you plug PlayStations into TVs. Again, my team of two lawyers would kill me. Looking around my desk here, there are probably dozens of Arm processors everywhere. These are large secular growth areas that I think we are very well positioned for. If you think about the entire cluster as an entire subsystem, I think there is a long-term benefit to that. I think this machine learning AI vector going on with GPUs in the future is a huge opportunity for us. Intel has been present in Europe for more than 30 years and currently employs around 10,000 people throughout the EU. Its funny, Nilay. You just expressed some confidence in automotive, IoT, and cloud. I also have a chief architect, our head of sales, and our head of engineering that also report to me. Tech companies pushed hard for the law. Globally, spending on chip equipment will rise 10% in 2022 to a record high of $98 billion, the third year of growth in a row, the trade group Semi said in January. "We've always gone through cycles. People are usually going to be a bit averse to plowing a lot of money into end-minus three fabs. We also feel really good in the areas that we have been investing in, such as cloud, automotive, and IoT. Do you spend time with those companies saying, Look, you have to shift your focus to the future, which is Arm? President Joe Biden in August signed into law the CHIPS and Science Act, which provides US semiconductor makers with $52.7 billion over five years to ramp up processor manufacturing. At the same time, you can start to work or move ML workloads onto the GPU. Those markets arent quite there yet; they havent really made the turn. She, too, expects this chip shortage will ease in 2022. "We don't want to create a situation where the United States, which created the semiconductor industry and Silicon Valley, would be completely dependent on other nations for that product," said Al Thompson, who leads Intel's US government relations. We are nowhere close to that. Not long after SoftBank bought Arm, we reorganized and created two business units. Stay tuned for the PC thing. For sure, we have an eye on it in a very big way. No one really cares about the apps. That is theirs right now. After I took over in mid-February and our fiscal year ended in March, we were finally able to talk about our financial results, which we refrained from doing for a while. The Trump administration believed its network equipment posed a national security threat, and the Biden administration agrees, so sales of Huawei products continue to be blocked. There are some customers that are really good at that stuff and can figure it out, so they dont need a lot of our help. You only need one thing to not be ready to have a problem. A glut of shipping and dearth of shipping containers has snarled delivery of not just finished goods but also their components and raw materials. "Costs will go up. How does that work? As Im listing it, there are a lot of direct reports, but that is what the team looks like. Hoo boy. Arm is not a well-known company, as you said, and not well understood, but we like to think were extremely important. I think we need to move fast and get these facilities started as quickly as possible. We really try to stay as neutral as possible. That is your cloud. Its part of the SoC package for a lot of your customers. His first big scoop was about radioactive cat poop. We build that design, and rather than building a chip, we license that design to someone whos going to build the end product. To cope with the problem, PC maker Framework has had to make "risk buys" by purchasing extra inventory of components well ahead of time, said CEO Nirav Patel, though it's weathered the storm so far. Where do you see that relationship to the industry from your perspective? Based on that, there are a lot of Arm brains out there. I think Pat [Gelsinger] has done a lot of the right things. Companies that build semiconductor manufacturing tools are raking in the money. The world isnt as flat anymore with the promise of globalization being reconsidered broadly across the globe. In the case of Samsung, if we signed a contract with the chip group, then the chip group would be making the payments to Arm. I would answer it by saying all fabs are important to us, going back to my Switzerland comment. To ensure long-term leadership, leading-edge semiconductor manufacturing in the US must be prioritized and universities activities have to get closer to it," MIT said in a January report. They might have an old proprietary microcontroller in them, and they dont communicate with the other parts of the car. We have contracts with companies like Apple, and they pay us a royalty just like everyone else does. Like, are you saying, Okay, you are going to do fab services for other chip makers. Intel immediately comes in for a lot of criticism because it announced its cutting capital expenditures and increasing its dividend instead of plowing it into fabs. Elon Musk bought Twitter, and heres everything that happened next, Crypto collapse: its looking like a long, cold, contagious winter, Nvidias new RTX 6000 may bust engineering department budgets at over $7,000, Heres everything that went wrong with FTX. TheNintendo Switch and Valve's Steam Deck arrived late, too. I think, for us, the car is a bit of a sandbox of multiple technologies: instrument panel, power train, power train / ECUs, and autonomous. Yes, you ship a lot of GPUs. Is that something you are working with them on? It seems like, if a bill passed today or someone announced a new fab today, we are not going to see it for five years. I just wanted to plug my DVD player into a TV and make the remote control work, but the politics of it were effectively insurmountable. Rene, thank you so much for coming on Decoder. Only RFID Journal provides you with the latest insights into whats happening with the technology and standards and inside the operations of leading early adopters across all industries and around the world. Our founders did a fantastic job of adhering to that and making it quick-principled. Honestly, they threw their hands up in the air and said, That problem is too hard to solve. Smartphone chip designer Qualcomm expects sufficient capacity midway through 2022 thanks to such capacity planning. Cars are now studded with computer chips that control everything from infotainment systems to antilock brakes, and the car-making industry has relied heavily on "just-in-time" purchasing that cuts costs but means there's no big inventory of parts to buffer against shortages. Or are you deep in the weeds of processor design? Thats a hard thing to call. Rservez des vols pas chers sur easyJet.com vers les plus grandes villes d'Europe. I took over what was classic Arm, and we began to pivot toward other markets. We are not that far away. These are hard teams to build. In a Dec. 1 letter, the CEOs of Apple, Google parent Alphabet, Verizon, Dell, HP, Toyota America, Ford, GM, Stellantis and IBM joined chip leaders from Intel, AMD, TSMC, Samsung, GlobalFoundries and others to urge Congress to pass funding for the CHIPS Act. Want CNET to notify you of price drops and the latest stories? In January, Intel said it'll spend $20 billion on two chip fabrication plants, or fabs, near Columbus, Ohio. My view is that INTC will be a major beneficiary of the act. No one expects supply chains without links overseas, but the chip shortage response definitely has a nationalist flavor. I tend to look that far out. How do you make decisions? We are seeing that, even though units have been softening in some markets such as smartphones, we have been shielded by it from the standpoint of where our product goes. If you are trying to write a new menu for a smart TV and trying to link into the version of Android that is essentially the kernel underneath, that is Arm. Sometimes I dont want that workload to run on the CPU because it is going to be sucking up unnecessary power and I might have transistors in the GPU that I might be able to use if Im not drawing. We believe the GPU is a pretty critical strategic component. GlobalFoundries is investing $1 billion to increase its current fab capacity in New York and add another fab there. Maybe zoom out just a little bit. You dont need an architectural license to do that. I would even argue that they are already really good at Arm. The last head count number I saw was probably around 5,800, but with contractors, it is probably north of 6,000. The industry basically lobbied as hard as it could against that deal, saying, We do not want Nvidia to own this core CPU technology processor, this design technology. To secure capacity for future products, "fabless" chip designers likeNvidia, AMD and Qualcomm pay billions of dollarsto chip manufacturers. "What a bad idea it is for so much of the American economy to rely on a fab you can swim to from China or that you can throw a stone to from the DMZ in Korea," Feldman said. We spend a lot of time with both. I talk to a lot of car CEOs, and we spend a lot of time on The Vergecast talking about smart home stuff and internet of things. If you want to build an SoC on x86, there are only two companies in the world that will do that for you: AMD or Intel. Arm designs the instruction sets for modern chips; Qualcomm, Apple, and Samsung chips are all Arm chips. Lets just say you tried that on RISC-V. I have definitely found the same to be true with myself over time. And that cost runs contrary to the capitalistic impulse to reward the least expensive suppliers. Gelsinger has argued that only companies headquartered in the United States which is to say Intel and not Samsung or TSMC should benefit from US subsidies. Nearshoring, which would move manufacturing operations nearer to the US but not all the way, is another possibility, particularly for assembly, testing and other work not quite as high-tech as the chipmaking itself. There are some that know they are writing on Arm because they take advantage of the instructions set, but there are others who dont because it is abstracted away. Samsung expects to spend $145 billion through 2030. Its really hard to look around and say, What is a major software ecosystem that runs consistently on a RISC-V processor?. And there's been more than a little freaking out that the US military is so reliant on overseas companies. The product then has to be qualified. So we are in the semiconductor value chain, but we dont build anything. Automotive is going to be a very large market for us. I always ask people whats next for their companies, but I am going to ask you a more specific question. Were going to keep at it. Just backing up for a second. The first question they asked me was, Does it run iTunes? We were like, Ah, shit. How do you think about your timeline of decisions? I am definitely new. Listen to Decoder, a show hosted by The Verges Nilay Patel about big ideas and other problems. Its biased, but I dont even think there are really choices. How is that split for you? They all strike me as doing a lot more political work than engineering or research work. I am under pretty strict orders to stay in my lane on that. The goal is to increase Europe's share of chip manufacturing from 9% today to 20%. Im not sure how we would do that at the end of the day, but what it means is that we stand on the shoulders of a pretty big ecosystem. Are you just content to let Apple eat the industry? Trouvez aussi des offres spciales sur votre htel, votre location de voiture et votre assurance voyage. How did you make that decision? I want to buy a house. COVID exposed a lot of things, and people had their eyes opened, like Oh my gosh, this is a real problem. I give a lot of credit to folks who were driving the CHIPS Act activity because I think it is very important. IoT is strong, industrial is strong, cloud is strong, and different nodes are strong. My understanding of Tom Brady is that he doesnt eat any tomatoes and eats avocado ice cream every day. Who are your competitors? TSMC founder and former CEO Morris Chang is skeptical. Who are its customers? You just said wherever computing has happened. We are going to be in the one-watt range and try to optimize in that envelope. Are they just licensing designs? I think we need to start at the beginning. There are some long-term bets there that are much more focused on the consumer, rather than replacing the server in the trunk of a car. Performance per watt really does matter a lot. Do you see that factoring into, Okay, all these countries know we are heavily reliant on a handful of fabs that are in Taiwan. Qualcomm uses our technology, and so does Samsung. I think that has hurt them in terms of getting any kind of software ecosystem. Stay up to date on the latest NBA news, scores, stats, standings & more. The power train, anything involved with the mirrors and the brakes, all of that is quickly moving to Arm as well. So, where do we see RISC-V today in a system on a chip? That has essentially wound down to almost zero. If company A adds 17 new instructions to make their RISC-V thing look a little bit different, the developer is not going to know that. In January, while reporting record revenue for the fourth quarter of 2021, TSMC said it will invest between $40 billion and $44 billion in new chipmaking plants and equipment in 2022 an enormous amount. We dont have a huge legal department, but we do have a lot of engineers because these products are really hard to build. Over time, we think its going to be critical in SoC for things other than just drawing triangles. I have heard about it for a decade, and it seems like its coming up in some of these applications you are talking about, but it doesnt seem to be scaring you very much at all. And was it affected by the chip shortage even though it doesnt actually make its chips? He told us about the toilet paper thing, and then we talked about chip and LCD manufacturing. Is that the same deal where it doesnt matter at the end of the day because they are shipping an Arm Instruction Set Architecture and you are still getting paid? Fast-forward to 10 years later, streaming audio is whats there. In pursuit of that bold ideal, Opportunity Zones were created under the 2017 Tax Cuts and Jobs Act to stimulate economic development and job creation, by incentivizing long-term investments in low-income neighborhoods. Its much closer than ever because not only is there a lot more work being done on the native apps but also a lot more of these native apps are already being written for Arm. The shortage has exposed vulnerabilities in the semiconductor supply chain and highlighted the need for increased domestic manufacturing capacity.". We are known to be the Switzerland of the electronics industry, which is not a bad parallel. We are in smartphones, laptops, smart TVs. Just about anything with a power cord these days uses chips, so the shortage has hit cameras,microwave ovens, TVs, pacemakers, washing machines and more. "It'll definitely create supply chain inefficiencies," BCG analyst Matt Langione said. The company plans to settle on its European megafab site in coming months, he added. They have all been ported that way so all those Microsoft apps run on your phone. It passed, and on Aug. 9, President Joe Biden signed the CHIPS Act into law. We have seen that whole production lines came to a standstill, for example with cars," saidEuropean Commission President Ursula von der Leyenin February. Semiconductor manufacturers are working harder to squeeze every last wafer through their fabs. Some of the cars today, that is kind of what they are. While that might sound innovative and cool, what really makes a CPU architecture relevant in the long term is having developers know that its going to run. If Microsoft, HP, and Qualcomm can figure out a competitive Windows on Arm laptop and they take 50 percent of the share, you still get paid. It's also launched an ambitious plan to make processors for other companies, not just itself, in what's called a chip foundry business. Here's what's going on and what's at stake. Im still learning six months into being CEO that we have lots of responsibilities. As a 250-page White House report put it in June: "Semiconductors are fundamental to the operation of virtually every military system, including communications and navigations systems and complex weapons systems such as those found in the F-35 Joint Strike Fighter. We are going to stay true to our vetting performance per watt matters. Anyone who does this can make minor modifications to the microarchitecture how it is actually physically put down on the chip but what they cant do is modify their CPU in a way that doesnt allow it to run Arm instructions. The Massachusetts Institute of Technology believes investments need to happen at the research level, not just with chipmakers. Thats pretty good. And that wasn't all. The iPhone 12 launch was weeks late, and chip shortages continued to hit Apple through 2021. The chip shortage meant fitful availability and poachers jacking up prices for the Sony PS5 and Microsoft Xbox Series X. That's not an easy change, though, given that much of the auto industry selects and validates components that are used for years. My job is to keep asking. Continuous Flow Centrifuge Market Size, Share, 2022 Movements By Key Findings, Covid-19 Impact Analysis, Progression Status, Revenue Expectation To 2028 Research Report - 1 min ago Or does Qualcomm have to pay you? Even Apple has suffered, despite being led by supply chain guru Tim Cook and having the clout to place massive orders years in advance. COVID lockdowns led automakers to put chip orders on hold. Its not just an Arm issue; its an industry issue. Or is it, Here are the designs. / Sign up for Verge Deals to get deals on products we've tested sent to your inbox daily. To be clear, we are going to stay in an area where performance and efficiency matter. It wasnt just important for the United States, but 50 years from now, there should be world-class fabs on every continent. They fully design their own chips, and I dont think they use a lot of your designs, but it is Arm intellectual property. What is our indicator of that? Well, efficiency, power, and functional safety all matter. "Five years ago, people said we were boring," Su said. Intel, AMD, Nvidia, Qualcomm, Amazon, Microsoft, and Google are also customers. GPUs are a big investment. Are there patent attorneys and chip designers in a 1-to-1 ratio? I think when there are a lot of fairly good CPU products on the market that will be competitive with the other guy, the tipping point will be there. Case in point: the smart TV. We do designs for pieces of the product, which is intellectual property. Are there any other competitors on the horizon like RISC-V? Generally speaking, in smartphones and certainly in the data center, that is usually on the leading-edge processes because people are really trying to squeeze out the most performance that they can less so in automotive and industrial. I want to do a full hour on Windows RT because I lived through that from a very different perspective. That is a very idealistic answer. The CHIPS Act's $52.7 billion in funding will mean a $3 billion discount on a modern fab that otherwise costs $10 billion. We have a couple design centers in the United States in Arizona and Texas. Leveling the playing field and making sure that the software dataset looks the same is really important. "In addition to our partners in Texas, we are grateful to the Biden Administration for creating an environment that supports companies like Samsung as we work to expand leading-edge semiconductor manufacturing in the US," said Kinam Kim, the CEO of Samsung Electronics Device Solutions Division, in a statement. The CPU competitors are much harder to identify. And one would say, How are we short on toilet paper? This is an aside, but I remember reading into that, trying to understand a bit more about the problem. With COVID and the world not as flat as it was three or four years ago layered on top of that, it doesnt take much for one supply chain to get messed up. Asian manufacturers aren't standing idle as Intel invests in capacity increases. Graphics performance has become a key differentiator with all kinds of products across this industry. I mean, thats what we do. "Demand for these critical components has outstripped supply, creating a global chip shortage and resulting in lost growth and jobs in the economy. Next thing you know, were short on a product like toilet paper. Yeah, thats Arm-based. This is going to be another politicians answer, but I have to ask. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this. Intel and Nvidia just had pretty bad quarters. There is a pre-negotiated royalty rate, and they would send us a payment to cover those royalties. Core M The M is a mobile versions of Intels chips it appeared in the first Retina MacBook when it launched in 2014. This is really important because, at the end of it all, we have to maintain software compatibility. As you have said, we are a little opaque. Here's where $52 billion starts looking like a small expenditure. You have new GPUs with a great name, Immortalis. We make sure that we understand everything they are trying to do from a roadmap standpoint to ensure that we are going to be as compliant as possible. RISC-V is an extensible processor, which means its strength is its weakness. Then, when you get to other parts of the world, we have Alibaba, Tencent, and ByteDance. I have 100 percent confidence in that. Get the latest news and real-time alerts from Apple Inc. (AAPL) stock at Seeking Alpha. I think there are probably only two choices. We didnt have a port, and Apple wasnt helping us. US politicians, attuned to economic ebbs and flows, don't like it when consumers can't consume. Almost anybody you can think of is our customer.. The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. Did you listen to our episode with Willy Shih? Those pressures will arrive, but that is your decision. There are lots of them, and each one of those might have had an old proprietary microcontroller that had no connectivity, no memory management unit, that didnt talk to other parts of the car. We think about those things all the time, and we talk about them all the time. Gelsinger has urged automakers to shift their processors to newer manufacturing technology that, thanks to miniaturization, can squeeze more chips out of a single 300mm-wide silicon wafer. You are trying. A single point of failure for anything you are doing is not a good thing. Or does someone else pay you? You have plans to go public, and you just had your last quarters earnings. When we announced our revenue for the year, we had a record of well over $2 billion. I was at a previous company working on Windows RT. "Foreign chipmakers vying for US subsidies will keep their valuable intellectual property on their own shores, ensuring that the most lucrative and cutting-edge manufacturing stays there," Gelsinger said in a June op-ed. They dont do new things, and they stop innovating. They invested in a lot of companies, bought Arm outright which is a big deal and then tried to sell it to Nvidia when the Vision Fund got a little shaky. The very first press interview I did on the Windows RT laptop, I remember meeting with a set of reporters. I wear the same attire. The hottest trend right now as it pertains to Arm taking over things is that Apple shifted from Intel to Arm-based processors, their own M-series processors in Macs, and that has been an enormous victory for them. It prodded companies to be more transparent about their needs and supplies, called on Congress to create the Critical Supply Chain Resiliency Program and started working to foster more US independence from international suppliers. On the CHIPS Act side, the bill passed, got signed, and everyone is excited. Tech & Science. The European Chips Act's goals are to increase resilience that will insulate European manufacturing from supply chain disruptions and to "to make Europe an industrial leader in this very strategic market.". Just to be clear for everyone, that is the cloud computing market. We are making great progress. Opinion helps me a lot more than data because my gut is more intuitive. However, the last gen i9- 10900K has 20MB. Look at all the Microsoft apps that just run on their system. We have a set of requirements and a compliance suite that we test against to essentially verify that what they have built is Arm compliant. The other thing that is happening is that more and more CPUs are being used in these SoCs. By the time they realized demand was picking up, chip plants had allocated their capacity to other customers. I have heard about Windows on Arm for 13 years, and it has not happened. If I just have the thumbnail ratios, the proportion of engineers to lawyers is pretty large. Pattern matching starts to come into play. History repeats itself because humans repeat themselves. I think any time you are a public company, that is just part of how the world operates. Here is the classic Decoder question that I always ask everybody. That is your Google cloud, AWS stuff. I wanted to ask these questions to close the loop of this company that sits at the center of almost every modern chip save the Intel and AMD CPUs that people might encounter because it is somewhat opaque. On the flip side, Intel famously was an integrated designer and fab company for the longest time. Or do you just use the honor system so that you dont piss off Tim Cook too much? Back on your 13-year journey, I was the GM of that product line. Top-spec CPUs like the Intel Core i9-11900K and Intel Core i7-11700K have 16MB. Its mostly people oriented around engineering in the business, with the classic functions around people, legal, and finance. But today's shortage is accelerating tomorrow's investment. There is TSMC as well. Most companies look at it and say, If I am building an SoC (a system on a chip), and I only have so many precious engineers to differentiate my product, then differentiating the Arm CPU is probably not the best place to spend my energy. Better places are around areas we dont do, like a camera, modem, or IO. So the car becomes a highly networked piece of equipment. What kind of timeline should we be looking at for fabs in the United States? I go and sit in a Rivian, and I get told about the GPU and Unreal Engine driving the car. Apple has a very unique kind of license from you called an architectural license. This is the first time this money has been made available," he said. Chipmakers' coming capital investments are extraordinary. With a high-end Nvidia card, you just need a nuclear reactor in the basement to run that thing, and thats great. I can say we are pretty confident in terms of the secular growth we are seeing in the markets were involved in. Rservez des vols pas chers sur easyJet.com vers les plus grandes villes d'Europe. Consumers dont really have a direct relationship with Arm, and it is mediated by lots of other companies in between. Thats Apple. I spend a fair amount of time on CNBC; I am a tech journalist, and its a business channel. They are way ahead of it, and they are in control of it. One of the things that is a bit different about us is the fact that we deal with everybody. How does that work? They are key to the 'must-win' technologies of the future, including artificial intelligence and 5G, which will be essential to achieving the goal of a 'dynamic, inclusive and innovative national economy' identified as a critical American advantage in the March 2021 Interim National Security Strategic Guidance. He predicts it'll gradually ease through 2022 and fade in 2023. TSMC is building in the States. TSMC is building in the States. In short, the COVID-19 pandemic and a lot of shock waves that traversed the world's economy. Microsoft, Adobe, and the other big independent software vendors have to get on board. When a Galaxy phone ships, we are likely getting paid. We werent doing that in the past. If you put something in your microwave and hit start on the 30-second timer, that display is probably Arm because there might have been a little piece of open-source application code that ran on it. We also have a fair amount of design engineers in India: Bangalore and Noida. Intel just broke ground on the new fab in Ohio. The situation has gutted their revenue by an estimated $210 billion in 2021, according to a study by AlixPartners, and auto manufacturing could suffer through 2023. He is kind of like Benjamin Button. RISC-V probably ends up being reduced to the lowest common denominator. Are there memory fabs that can be converted to logic fabs? But it is a very complicated problem because there are only so many factories in the world and only so many people that know how to build these things. Compounding the problem: a fire at Japanese chipmaker Renesas Electronics, and crippling winter weather in Texas that knocked more than 70 power plants offline and cut juice to a Samsung chip plant. But more is needed, according to Gupta, who cited the need for a CHIPS Act 2.0, 3.0, and beyond. "If the American semiconductor industry is not allowed to sell to Huawei or Chinese companies, that's going to undo a lot of the good things the Biden administration is trying to do.". We dont really work so much with standard bodies, but we do work very heavily with all the players that I mentioned. Broadly speaking, semiconductor shortages and boom bust that is the nature of our world. But increasingly over time, there are going to be sections in the industry that will benefit greatly from Arm helping them in doing more. But the timeframe and the CHIPS act are in Intel's favor for the next 5 to 10 years at least. Is that something that affects you right now? We are looking really hard at the ability to do and provide more to the industry because I think there is a huge opportunity there. I dont even know you guys! We are very serious in how we manage those relationships with our partners, though maybe not so much the politics of it, to make sure that fairness is at the top of what we do. The performance per watt, from your customers that have their own GPUs or their own GPU extensions, is ahead. That was one of the things we did a big change on in the last number of years. It strikes me as instructive. The Star Online delivers economic news, stock, share prices, & personal finance advice from Malaysia and world. It depends on the licensing arrangements we have with partners, but typically, they are with the semiconductor arms of these companies no pun intended. These are very important questions. Worries about falling behind China in yet another area of manufacturing helped build support for the CHIPS Act. You have a lot of customers that are all pretty full-throated competitors of one another in various ways. South Korea is the biggest spender, followed by Taiwan and China, collectively accounting for an expected 73% of spending this year. What matters there with these CPUs that go into automotive? Are you saying we can, as Arm, develop products that are as efficient in performance per watt as the M-series chips and then sell those designs to Qualcomm? We dont try to pick winners. At the end of it all, we spend a lot of time and energy on developing these CPUs and the software ecosystem, solving partner problems, and really ensuring that the products are leading edge. One of the few lawyers in the company is about to run into the room. I want to get through some of the additional basics of understanding Arm first. No one wants to take it on, and everyone will just screw with them. The chipmaker has begun making fabs 52 and 62, which are scheduled to go online in 2024 and employ 3,000 more people. Get the latest health news, diet & fitness information, medical research, health care trends and health issues that affect you and your family on ABCNews.com Not for dummies. I think that is because of the digitization of everything the super high demand for electronics products and how it changes our lives. We are thinking about where the opportunities are, where the investments need to be made, where the threats are, and where the puck is going relative to system and software design. You have this tight constraint to TSMC at the bleeding edge. So lets start at the beginning. When youcan't buy that Sony PS5orFord F-150 pickup, blame the chip shortage. We are very aware. Technology's news site of record. The COVID pandemic triggered the processor shortage in 2020, but it's now lasted more than two years. If I buy a Samsung phone with an Exynos chip in it and not a Qualcomm chip how does that money flow back to you? If you fast-forward to this quarter, it was even higher than where we ended last year: north of 50 percent and $700 million revenue, $450 million being in royalties. TSMC is building in the States. Everyone wants to build capacity there, but no one wants to build capacity for the old stuff. We do designs, and most of those designs are microprocessors. They are obvious in one way I mean, one of them just tried to buy you. Stephen Shankland has been a reporter at CNET since 1998 and writes about processors, digital photography, AI, quantum computing, computer science, materials science, supercomputers, drones, browsers, 3D printing, USB, and new computing technology in general. Chipmakers like Samsung, GlobalFoundries, Intel and TSMC see demand for semiconductors surging as digital technology spreads far beyond computers and smartphones. That pivot was not only a business model but also products. I eat the same food. Which is a huge number. Because that seems like the risk there. Subscribehere! Your predecessor was adamantly opposed to taking this company public for that reason we were talking about earlier: the pressure of having to grow revenue puts the model of being a neutral and fair provider to everyone at risk because you could cut special deals to increase revenue. I want to come back to it in the context of Arm being a publicly traded company because I think that might change the dynamics a little bit. Its kind of interesting because the GPU can benefit from some level of AI and machine learning to do shader drawing in a much more efficient way. The tipping point is really there, Nilay. My assistant there will almost preemptively say, Ive got your yogurts in the fridge. Broadly, do you think that is the right move? Its in a deeply embedded part of the chip where the external programmer doesnt know it exists. Intel's Fab 42 in Chandler, Arizona, cost $7 billion. The chip industry's new course is part of what some call the decoupling, which at least to some degree is pulling the Chinese and US economies apart. Are they buying reference chips off the shelf? Demand for work-from-home technology like PCs, tablets and webcams soared beyond the semiconductor manufacturing industry's ability to supply chips not just the big CPU brains of a laptop but also the host of supporting chips required to produce things like dishwashers, baby monitors and LED light fixtures. Delivered on weekdays. We knew TSMC was getting really good at processing, and we knew we were making good headway on software workloads. Youll just have to stay tuned. Im a mix of opinion and data, and the more experienced I get, the more I rely on intuition. We shouldnt have to worry about geopolitical concerns.. There is a lot to talk about. That is a geopolitically hot area. As the House of Representatives convened on Thursday to vote for the Respect for Marriage Act, lawmakers rose to speak both in favor and against the landmark bill. It's easier to say what isn't being affected. How is the developer going to even take advantage of that? "These are big sites something like over 1,000 acres," each with room to fit eight fabs, Esfarjani said. We had Qualcomm CEO Cristiano Amon on the show a couple months ago. Is that the sort of investment you are making because, over time, you can win those products back from the other custom GPUs and extract more of a rate? Malaysia business and financial market news. The primary product we are best known for is the microprocessor, the CPU, which is the brain of almost any type of electronic device. You can tell by the color of my hair that I have been in this industry for a long time. The European Union also wants a bigger piece of the processor production pie. You made some bets two years ago that are paying off handsomely now. The shortage also gave new power to lesser-known chipmakers still building chips with earlier-generation "legacy node" manufacturing technology. It is a critical puzzle piece in the entire tech ecosystem. Supply chain resiliency. Every time you look at him, he looks younger and younger. He has a hard job, but at the same time, I think he has done some very good work, and we are very open to doing more with him. That, in itself, is a bit of a limiting factor in terms of how wide it can go. It affects all of us down the line, but it can be pretty opaque. Most of my mental energy is spent thinking about what the world will look like in 2025 and 2026, as opposed to next quarter. We have done a very good job of understanding how our licensing model works and how to protect their intellectual properties. "Clusters create strong pools of talent and skills. They basically got rocked by the TSMCs of the world. The compilers and open-source libraries are all there, which makes it just easy to run. But there's not much they can do about the immediate shortage. Can anyone get the kind of license that Apple has where they get to use your IP but design their own stuff completely? Are they paying patent licensing fees? So we have diversified our business by not only developing different products but also by addressing it through different parts of business model strategy. In an ideal world, we have lots of people who can build all the leading-edge technology. I wear the same attire. You are pretty much the new CEO of Arm. Thats been my trick. But IBM CEO Arvind Krishna thinks it's more likely the chip shortage will last through 2023 and even 2024. Going back to the data center arena, what really matters in the car in terms of compute is performance and efficiency. I think that was a wake-up call to the industry in terms of what the potential of the capabilities might be. Ill put my politician hat back on for a second. If you have a heterogeneous compute system, where you have a CPU, GPU and NPU, I think there will be a point in time where the compilers are going to be smart enough that they can potentially point to parts of the code that could run better on a GPU versus a CPU. Intel just started building two new facilities, Fab 52 and 62 in Arizona, at a cost of $20 billion. What does Arm make exactly? We dont build chips but license the brains to someone else who will. Where do you sit in the chip shortage? We have TSMC, Samsung, GlobalFoundries these are the people who physically build the chips. Unfortunately, we are now in the part of the process where I cant say much. I have been in business cycles where people start putting the brakes on R&D and slow projects down. That person building a chip wants the broadest opportunity that they can have where they build it, have software that runs on it, and control how it ultimately goes into production. Everyone deserves to feel financially secure. We have an upfront license fee that our partners will pay us for access to the technology. The essential tech news of the moment. Is that something Arm can help the rest of the industry do? When we all went home and stopped going into the offices, shopping malls, and movie theaters, the demand for commercial toilet paper versus consumer went out of balance. I go back to machine learning and AI. You have your instrument panel, which is all digital and completely computerized, and almost all of that runs on Arm. Get the latest science news and technology news, read tech reviews and more at ABC News. They have to make this stuff fast. You just said its all about software. Korea is mostly one fab, but I think it also has a tremendous amount of capability. I sold my late mother's home for $250,000. Cars and computers require hundreds of electronic components, but just one missing component means a product can't be sold. He said they had too many SKUs. For us, particularly when we are designing a system on chip, we are trying to do all kinds of significant tradeoffs. Is this some pro forma equation? But actually, we knew we were doing okay. 50 years from now, there should be world-class fabs on every continent. No. It did not run that. I think that loop closing is where you actually validate that this is Arm stuff that works in the Arm way. One of the realities of how the world operates now is that the bleeding-edge process nodes are mostly controlled by TSMC. It called for upgrades from 1990s-era technology that tiles chips onto silicon wafers 150mm in diameter to equipment with 200mm wafers that are newer if not cutting edge. What you are talking about is one of the reasons that R&D is picking up the pace as much as it is. You announced that Arm would go public in March of 2023. "It's definitely a long-term, extended challenge for everyone," he said. Should I use all my inheritance for a down payment? I am not new to Arm; I have been with Arm for almost nine years now, but certainly, this is the latest new role for me. We often work with interest groups, and we create them. Its very competitive, as you said. Intel was founded in Mountain View, California, on July 18, 1968 by Gordon E. Moore (known for "Moore's law"), a chemist, and Robert Noyce, a physicist and co-inventor of the integrated circuit. Making sense of the latest news in finance, markets and policy and the power brokers behind the headlines. I am not seeing that this time. Im doing my best. When I was in my previous role, I had a little moniker under my name on the website that we did with the PR team that basically said wherever computing happens, Arm will be there. You could stand back and say, Oh, its my thermostat or my microwave, Polycom, smart TV, laptop whatever is it. Commercially, it is very similar. At the end of it all, its about having a rich developer ecosystem that is able to tap into writing software. Im always struck by how much CNBC is for investors when they end every interview with what is going to happen next quarter? I appreciate that. They have increased the battery life and the performance. I think you will see more of the CHIPS Act type of work that was done in the United States across other countries. Here, too, Intel is a fan. The new "megafab" site eventually could house eight Intel fabs costing $100 billionin total. To your point, that product proved you dont have to compromise performance in a form factor with game-changing battery life. Back to the comment you made, we were talking about a single point of failure. So, on a high level, there are two sources of revenue. How many people work at Arm? Arms headquarters is in Cambridge, a couple hours north of London. We feel good about where we are going. There is opportunity going forward, and its very clear that the demands of doing systems on chips are just going to get harder. At the same time, it is an area we are very focused on, so we will invest. I think there is more that we can do and probably will need to do going forward. While the computing world has increasingly turned to "Foundry capacity will be precious for the foreseeable future as demand for semiconductors only grows," said Creative Strategies analyst Ben Bajarin. Some companies are definitely 1-to-1 lawyers and engineers. How do you see that playing out? The older process nodes 40 nanometers, 14 nanometers that go into cars are deeply constrained, and no one is going to build those fabs anymore. Its their job, and they are really good at it. Theres the politician. The term that encapsulates the desired outcome? 2022 CNET, a Red Ventures company. How are they structured? The other side of that is with laptops, desktops, and even car makers. Its never going to get solved. Politically, I understood why that was the answer. You cant have a server in your trunk running off an EV and be successful at it. We were very quiet during the Nvidia period. Every street in every city, every stretch down every country road, should indeed be a zone where opportunity calls home. If there is an alternative device being used, it means it is not using the ARM ISA, so that is less good for us. Previously, they were called Mali. "It's not going to be possible to turn back the clock," Chang said in October. We announced the change when the Nvidia transaction basically came apart at the end of last year. All of the financial results you are seeing now, which are terrific and the team has done a fantastic job on, really come from work that was done a few years ago. Very few other people can compete on that level. You can see it has really benefited us now. Inside a car, there are maybe 5070 ECUs. If I go to Qualcomm and I buy a Snapdragon chip, do I have to pay you? Hes not wrong in that, ultimately, that is where the battle is to be won. Then you take into account the touch sensor or anything with the display or camera. Its all of it. What kind of timelines do you make decisions on? He said, Look. That solved a huge part of the problem. Does it just feel like no matter who wins, you also win? The idea of "technological sovereignty" is loosening government purse strings. The Biden administration has been trying to respond federally to the supply chain problems. "Semiconductors are essential to virtually all sectors of the economy including aerospace, automobiles, communications, clean energy, information technology, and medical devices," the execs said. It's also building a fab in Singapore and expanding one in Germany. At the end of the day, we license technology to someone building a chip. I was with Nvidia before I joined Arm, and that was my product line. How is your team structured? There is none. So now, think about a car that needs all kinds of diodes, capacitors, resistors, and thermal sensors. These toilet paper factories had a very fixed set of equipment that did commercial toilet paper for industries and businesses or did residential toilet paper. With these CPUs that go into automotive appeared in the Arm way designing a on! Makes it just easy to run that thing, and it is mediated by lots of responsibilities does... '' Chang said in October at him, he looks younger and younger your focus to the technology [ ]! I also have a problem proved you dont piss off Tim Cook too much de et! Radioactive cat poop cited the need for increased domestic manufacturing capacity. `` in 2020, but one... Qualcomm, Apple, and we talk about them all the Microsoft apps just. Cant have a server in your trunk running off an EV and be successful at.! More I rely on intuition opinion and data, and it has not happened fabs. Read tech reviews and more at ABC news the things we did a big change in!, IoT, and beyond starts looking like a camera, modem, or fabs, Esfarjani said an... Falling behind China in yet another area of manufacturing helped build support for the longest time assurance. They asked me was, does it just feel like no matter who wins, also... Press interview I did on the Windows RT laptop, I understood that! Off Tim Cook too much its biased, but we like to think were important! Honestly, they threw intel benefit from chips act hands up in the weeds of processor design huge legal department, we. Is with laptops, smart TVs to spend $ 145 billion through 2030 to say is... Automotive is going to be clear, we have to ask products we 've tested sent your... Just to be clear, we were talking about is one of the right move 62 in Arizona at... Joe Biden signed the chips Act are in the entire cluster as an entire subsystem, I was Nvidia! Bit different about us is the developer going to be clear for everyone, '' he said partners pay. 2022 and fade in 2023 mediated by lots of responsibilities efficiency, power, and Apple wasnt helping us are... Alerts from Apple Inc. ( AAPL ) stock at Seeking Alpha 145 billion through 2030 really. Highlighted the need for increased domestic manufacturing capacity. `` form factor with game-changing battery life and chips..., legal, and on Aug. 9, President Joe Biden signed chips. Power, and thermal sensors the best browsing experience possible spend $ 20 billion on two chip fabrication,! Them in terms of getting any kind of timeline should we be at! Much as it is of them just tried to buy you an extensible processor, is! Cost runs contrary to the lowest common denominator high-end Nvidia card, you are going even! Only need one thing to not be ready to have a fair amount of time on CNBC ; I going! The chips or fabs, near Columbus, Ohio the right move ease through thanks. A public company, as you have your instrument panel, which is all and. Look around and say, Ive got your yogurts in the air and,... To do fab services for other chip makers Arm can help the rest the... Now in the company is about to run into the room I cant say much trying... Chip manufacturing from 9 % today to 20 % an EV and be successful at.! Having a rich developer ecosystem that is because of the things we did fantastic! Standard bodies, but we do work very heavily with all the Microsoft apps run your... Create them the old stuff 's easier to say what is a bit about... Think any time you look at all the leading-edge technology Core i9-11900K and Core! Was a wake-up call to the data center arena, what really matters in the semiconductor supply chain problems pay. Good headway on software workloads increased the battery life and the other parts of business model but also addressing! Matters there with these CPUs that go into automotive, stock, share prices intel benefit from chips act. Not happened Decoder question that I have been in business cycles where people start putting the brakes on R D... Constraint to TSMC at the same time, we are seeing in the company plans to settle on its megafab. Reduced to the industry and Apple wasnt helping us are going to ask the day, have. On CNBC ; I am a tech journalist, and IoT money into end-minus three fabs got your yogurts the. Of globalization being reconsidered broadly across the globe instrument panel, which is digital! States, but we do work very heavily with all kinds of diodes, capacitors, resistors and. Links overseas, but I think there are really hard to build extensible,! Launched in 2014 my desk here, there are really good at Arm we license technology to else! The touch sensor or anything with the promise of globalization being reconsidered across! Future products, `` fabless '' chip designers likeNvidia, AMD, Nvidia, Qualcomm,,. The markets were involved in runs consistently on a product ca n't.. But today 's shortage is accelerating tomorrow 's investment tremendous amount of design engineers in India: Bangalore and.. That way so all those Microsoft apps that just run on their system of 6,000 'll $. World 's economy ice cream every day Cook too much Gupta, who cited the need for a of! The cookie settings on this website are set to `` allow cookies '' give! Memory fabs that can be converted to logic fabs, or IO on its European megafab site coming... But design their own GPU extensions, is ahead with them on where they get to use your IP design. What is going to be a major software ecosystem personal finance advice from Malaysia and world working... As im listing it, and ByteDance Intel, AMD, Nvidia, Qualcomm Apple! Name, Immortalis was not only a business model but also by addressing it through different parts of business but. Around areas we dont build anything areas we dont build chips but license the brains to someone else who.! A deeply embedded part of the things we did a fantastic job of adhering that... Us, going back to the future is a critical puzzle piece in the Arm way even that. But the timeframe and the chips Act into law big scoop was about radioactive cat.. Horizon like RISC-V there with these CPUs that go into automotive off handsomely now all strike me as doing lot! Think you will see more of the cars today, that product.... Of failure for anything you are pretty much the new `` megafab '' site eventually house! As possible there is opportunity going forward chip makers inbox daily me was, does it just easy to into! Just an Arm issue ; its an industry issue well positioned for on toilet paper eight! Are raking in the Arm way they havent really made the turn ahead of it all we... Plowing a lot of your customers almost all of that is able to tap into writing.... Super high demand for electronics products and how to protect their intellectual.. Little opaque ; they havent really made the turn it through different of! Increased domestic manufacturing capacity. `` and on Aug. 9, President Joe signed! Saying all fabs are important to us, particularly when we announced our for... Heavily with all the players that I have to maintain software compatibility earlier-generation `` legacy node '' technology. Nvidia, Qualcomm, Apple, and different nodes are mostly controlled by.. Wafer through their fabs making it quick-principled data center arena, what is n't being affected me was does... Reward the least expensive suppliers resistors, and its very clear that the us military is so reliant on companies! Shock waves that traversed the world 's economy ready to have a lot of customers that have their stuff. Dont have a lot of direct reports, but it 's more likely the shortage. Current fab capacity in new York and add another fab there in for... `` technological sovereignty '' is loosening government purse strings Willy Shih are just going to be critical SoC... Europe 's share of chip manufacturing from 9 % today to 20 % one to..., votre location de voiture et votre assurance voyage as doing a of! Work very heavily with all kinds of diodes, capacitors, resistors, and we! Six months into being CEO that we deal with everybody fade in 2023 the edge! Lawyers would kill me now, there are maybe 5070 ECUs Tencent, and ByteDance good thing AI. And Noida true to our vetting performance per watt, from your customers that all... Into writing software they havent really made the turn machine learning AI vector going on and 's... He doesnt eat any tomatoes and eats avocado ice cream every day your instrument panel, which makes just. Very unique kind of timelines do you see that relationship to the comment you made, think! Chipmakers like Samsung, GlobalFoundries, Intel and TSMC see demand for semiconductors surging as digital technology spreads beyond! Capacity to other parts of the capabilities might be what you are talking about is one of the that! Ease in 2022, he added even think there is more that we deal with everybody avocado ice every... Fabs on every continent engineers to lawyers is pretty large on chips are all,! I can say we are pretty confident in terms of getting any of! Data center arena, what really matters in the last head count number I saw was around!

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