According to reports, since 2020, chip design company ARM’s automotive business revenue has more than doubled. The move comes as ARM seeks new growth engines before going public. In the next few years, it is expected that ARM will face competitors such as Intel and MIPS in the automotive chip market, and it will not be able to tell the winner in the short term.
ARM’s automotive business unit has been growing faster than other divisions such as smartphones and data centers, said Dennis Laudick, ARM’s vice president of automotive product strategy. The division primarily powers everything from electrification to advanced driver assistance systems (ADAS) and in-vehicle “infotainment.”
That’s largely because modern cars require more chips, and those chips are more expensive than ever. A severe shortage of auto-related chips is expected this year due to strong demand.
“A high-end car has one of the most complex software systems in the world right now,” Laudick said. “It’s basically a data center on wheels.”
In 2022, ARM’s total revenue will increase by 35% to 2.7 billion pounds. Among them, revenue from the automotive business has increased five-fold in the past four years.
Analysts say ARM’s ability to provide services for electric vehicles and autonomous driving will be crucial to the company’s successful listing on the New York Stock Exchange this year. In February last year, when Nvidia’s (NVIDIA) acquisition of ARM fell through, SoftBank announced plans to relist ARM by March 2023.
Intense market competition
At present, ARM mainly obtains huge profits by providing design licenses for smartphone chips. What investors are concerned about is whether ARM can continue to grow. Today, ARM is facing stiff competition from rivals such as Intel, MIPS and Synopsys.
Jay Goldberg (Jay Goldberg), an analyst at D2D Advisory, a consulting service company, said: “The semiconductor industry has been performing well and has achieved substantial growth. Today, all chip companies are chasing the next peak. And the automotive market is crucial. Importantly, no one has won this market yet.”
ARM now has about 85 percent of the global in-vehicle “infotainment” market and 55 percent of the ADAS market, Laudick said. The top 15 automotive chip makers, including Nvidia, STMicroelectronics and Renesas, use designs licensed from ARM.
But ARM faces tougher competition in chips for functions such as sensors and body controls. While ARM has made significant strides in developing IP for data center chips in recent years, it is currently focusing most on the automotive market.
It is reported that some high-end cars contain more than 100 million lines of code. By 2030, fully self-driving cars are expected to contain 500 million lines of code. By comparison, a Boeing 747 contains about 14 million lines of code.
S&P Global Mobility expects the average semiconductor value per vehicle to rise from $700 in 2020 to $1,138 by 2028.
Even traditional automotive applications require far more chips than in the past, said Marco Monti, president of the automotive business at European chipmaker STMicroelectronics. Full-scale electrification would add about $1,000 to the value of semiconductors per vehicle and could require as many as five times as many chips.
With the development of automobiles from “large hardware” to “complex software combination”, ARM has also rapidly increased its investment in software engineering. In 2016, the company invested about 75 percent of its engineering resources in hardware and 25 percent in software, up from a 50-50 split today.
draw for several years
And, increasingly, ARM is offering automotive chip makers such as STMicroelectronics and Nvidia the ability to try out different types of designs before purchasing a license, allowing them to familiarize themselves with their products and attract them in a competitive market. client.
This strategic play is critical to ARM’s ability to attract and retain customers across the business, but not all chipmakers are convinced.
Mobileye, the self-driving company owned by Intel, has 70 percent of the market for cameras used in driver-assistance technology. Some of the company’s most advanced chips use IP developed at MIPS. Mobileye founder Amnon Shashua said: “We like to buy computing processing units (CPUs) that have multiple suppliers.”
The rest of the chips Mobileye uses are made in-house, including those used for infotainment and displays. Shashua said it would be a disaster if Mobileye relied entirely on ARM, which was successfully acquired by Nvidia last year for $66 billion.
The most advanced self-driving cars are not expected to hit the market until the end of the decade. Over the next few years, chip design companies including ARM, Intel and MIPS will scramble to design solutions for self-driving cars.
“They’re fighting, but no one is going to win for a few years,” said Goldberg, an analyst at D2D Advisory, an advisory service.
