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Apple's chip leadership seems to have pushed UK's Arm to develop its own advanced chip that is stoking fears in the semiconductor industry

1 cover Softbank - Arm

It was reported over the weekend by the Financial Times that there's widespread concerns in the industry that in-house chips developed by Apple, Arm’s largest customer, are outperforming those made by competitors such as Qualcomm and MediaTek. 

This has driven Qualcomm, via its acquired NUVIA team, to develop the Oryon processor to challenge Apple's in-house development. Yet Arm sued Qualcomm for designing its chip without procuring the necessary license.

Arm's dispute with Qualcomm may have triggered Arm to seek out an advanced design of its own. According to a report by The Financial Times (FT), "Arm is developing its own chip to showcase the capabilities of its designs, as the SoftBank-owned group seeks to attract new customers and fuel growth.

Described as the most advanced chipmaking effort the Cambridge-headquartered group has ever embarked upon, Arm will team up with manufacturing partners to develop the chip."

Multiple industry executives told the FT that "Arm's newest chip — on which it started work in the past six months — is 'more advanced' than ever before. Arm has also formed a bigger team that will execute the effort and is targeting the product at chip manufacturers more than software developers.

Arm has built a new “solutions engineering” team that will lead the development of these prototype chips for mobile devices, laptops and other electronics, according to people briefed on the move.

Rumblings about Arm’s chipmaking moves have stoked fears in the semiconductor industry that if it makes a good enough chip, it could seek to sell it in the future and thereby become a competitor to some of its biggest customers, such as MediaTek,  Qualcomm or Apple.

While Arm insists there are no plans to sell or license the product and that it is only working on a prototype, it's being met with skepticism. For more on this, read the full report by The Financial Times.  

The report indirectly hinted that Google would like access to a more powerful chip to advance it's Pixel phones against competitors and Microsoft would likewise want access to this advanced chip to power it's 'Surface' line of products. Arm made it clear in their recent annual report that its top 20 customers accounted for 86% of it's business. So the development of its own chip to possibly bring in new customers like Microsoft and Google is a temptation that could materialize if the company is forced to find new growth opportunities. Arm is trying to drive new profits to attract investors to its planned NASDAQ listing in New York.

Whether Arm is using this rumor to excite potential investors or is actually contemplating such a move is unknown at this time. The latter would definitely bring on lawsuits from existing customers and government bodies would likely open new inquiries. It's hard to believe that Arm would want to open that Pandora's box – but only time will tell.

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