Shulou(Shulou.com)11/24 Report--

According to news in the afternoon of January 4, Beijing time, it is reported that the revenue of the automotive business of chip designer ARM has more than doubled since 2020. The move comes as ARM seeks a new growth engine ahead of its IPO. In the next few years, ARM is expected to compete with competitors such as Intel and MIPS in the automotive chip market, and will not be able to tell the difference in the short term.

Dennis Dennis Laudick, vice president of automotive strategy at ARM, says ARM's automotive business has been growing faster than other divisions such as smartphones and data centers. The department mainly provides power for everything from electrification to advanced driver assistance systems (ADAS) and in-car "infotainment".

This is mainly because Hyundai needs more chips, which are more expensive than ever before. Due to strong demand, a severe shortage of car-related chips is expected this year.

"the software system of a high-end car can be said to be one of the most complex software systems in the world," Laudick said. "it's basically a data center on wheels."

In 2022, ARM's total revenue increased by 35% to 2.7 billion pounds. Among them, revenue from the auto business has increased fivefold in the past four years.

Analysts say ARM's ability to provide services for electric cars and self-driving is crucial to the company's successful listing on the New York Stock Exchange this year. When NVIDIA failed to acquire ARM in February last year, Softbank Corp. announced plans to re-list ARM by March 2023.

Fierce competition in the market

Currently, ARM makes huge profits mainly by licensing the design of smart phone chips. Investors are concerned about whether ARM can continue to grow. Today, ARM is facing fierce competition from competitors such as Intel, MIPS and Synopsys.

"the semiconductor industry has performed well and achieved significant growth," said Jay Goldberg Goldberger, an analyst at D2D Advisory, a consultancy. "Today, all chip companies are chasing the next peak. The car market is crucial and no one has won it yet."

ARM currently has about 85 per cent of the global in-car "infotainment" market and 55 per cent of the ADAS market, says Mr Lodick. The top 15 automotive chipmakers, including Nvidia, St and Renesas, all use ARM-licensed designs.

But ARM faces fiercer competition in chips with functions such as sensors and body control. Although ARM has made significant progress in developing IP for data center chips in recent years, the automotive market is currently the most concerned.

It is reported that some high-end cars contain more than 100 million lines of code. Fully self-driving cars are expected to contain 500 million lines of code by 2030. By comparison, a Boeing 747s contain about 1400 million lines of code.

S & P Global Mobility expects the average semiconductor value per car to rise from $700 in 2020 to $1138 by 2028.

Marco Monti, president of automotive operations at STMicroelectronics, the European chipmaker, says even traditional automotive applications need far more chips than in the past. Full electrification will increase the semiconductor value of each car by about $1000 and may require up to five times as many chips.

With the development of automobile from "large hardware" to "complex software portfolio", ARM has also rapidly increased its investment in software engineering. In 2016, the company invested about 75% of its engineering resources in hardware and 25% in software, compared with 50% each.

It's a tie for a few years.

And ARM is increasingly providing automotive chip makers such as STMicroelectronics and Nvidia with the ability to try out different types of designs before buying licenses to familiarize them with their products and attract customers in a highly competitive market.

This strategy is crucial for ARM to attract and retain customers throughout the business, but not all chipmakers are convinced.

Mobileye, an Intel-owned self-driving company, has 70 per cent of the market for cameras used in driver-assisted technology. Some of the company's most advanced chips use IP developed by MIPS. Mobileye founder Amnon Shashuya (Amnon Shashua) said: "We like to buy computing processing units (CPU) with multiple suppliers."

The rest of the chips used by Mobileye are made in-house, including chips for infotainment and display. 'If Mobileye is completely dependent on ARM, it would be a disaster if ARM was successfully acquired by Nvidia for $66 billion last year, 'Mr. Shashuya said.

The most advanced self-driving cars are not expected to be on the market until the end of the century. Over the next few years, chip design companies, including ARM, Intel and MIPS, will compete to design solutions for self-driving cars.

"they are fighting, but no one is going to win in a few years," said Goldberger, an analyst at D2D Advisory, a consulting service.

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