What's going on?
Chip design heavyweight Arm thinks its next juicy bulking opportunity lies in the auto market.
What does this mean?
Arm designs the chips found in smartphones across the world, but it’s the car chip segment that’s really booming right now – and the company seems to have realized which side its bread is buttered on. After all, carmakers need an increasing number of top-dollar chips for everything from electrification to driver assistance systems, so it’s no surprise that the auto chip market is set to double by 2027. What’s more, the average value of chips in each car is expected to rise a mouth-watering 60% in the next five years. But money that big never goes unchallenged: so, sure, Arm’s in an enviable position, with the top 15 auto chipmakers already using its designs – but tech powerhouses like Intel and MIPS are raring for a slice of the pie too, and they’re not likely to give Arm a walkover.
Why should I care?
Zooming in: Pulling out all the stops.
Cornering the auto market would be a big deal for Arm. See, the company’s owner SoftBank is gearing up to list the firm on the stock market this year, and any extra oomph could help attract investors at just the right time. That prospect has Arm working hard on new chip designs, and in a bid to snag more customers, it’s even letting chipmakers test them out before committing to a license.
Zooming out: China bows out.
While Arm’s looking for new growth, it seems like China is taking a step back. According to reports out on Wednesday, the government’s putting a hold on the massive cash injections earmarked for building a world-class chip industry – a sign of the strain that Covid and other issues have put on government funds. Just one example: the fiscal deficit, or the difference between government revenue and spending, hit a record high last year.