ACQ2 by Acquired: How ARM Became The World’s Default Chip Architecture (with ARM CEO Rene Haas)

Release Date: December 2, 2024
Hosts: Ben Gilbert and David Rosenthal
Guest: Rene Haas, CEO of ARM Holdings

1. Introduction to ARM and Rene Haas

The episode opens with Ben Gilbert and David Rosenthal welcoming Rene Haas, the CEO of ARM Holdings, a cornerstone company in the semiconductor industry. Rene Haas brings over a decade of leadership at ARM and previous experience as a VP at Nvidia, providing deep insights into ARM's pivotal role in modern computing.

Notable Quote:
Ben (00:00):
“ARM is the company that develops the instruction set architecture and many of the designs underpinning CPUs all over your life today, from our phones to our cars.”

2. Ubiquity of ARM in Modern Devices

Rene Haas elaborates on ARM's pervasive presence in everyday devices, emphasizing that ARM designs the CPUs, the "digital brains" of virtually all modern electronic devices. From automobiles to home appliances, ARM chips power a myriad of technologies that form the backbone of our connected lives.

Notable Quote:
Rene Haas (01:19):
“We do CPUs and that CPU is the digital brain of every modern electronic device.”

Statistics Highlight:
In FY 2024, ARM shipped approximately 29 billion chips, equating to four ARM-based chips per person globally.

3. RISC vs. CISC: The Architectural Foundation

The discussion transitions to the foundational architectural philosophies of RISC (Reduced Instruction Set Computer) versus CISC (Complex Instruction Set Computer). Rene explains how RISC’s simplicity—fewer, streamlined instructions—leads to lower power consumption and higher efficiency, contrasting with CISC’s more complex and power-hungry instructions.

Notable Quote:
Rene Haas (10:25):
“RISC was seen as a much more efficient way to do computing… one of the benefits you had of that was just lower power systems.”

4. ARM’s Strategic Business Model: Licensing and Royalties

Rene delves into ARM's unique business model, which revolves around licensing its instruction set architecture (ISA) and designs to various semiconductor companies. Instead of manufacturing chips, ARM licenses its technology, enabling partners like Apple, Samsung, and Qualcomm to design their own ARM-based CPUs.

Notable Quote:
Rene Haas (39:40):
“Our business model way back in the day, and it's still pretty much holds, is that we have an upfront fee for licensing and royalties.”

He distinguishes between two types of licenses:

• Architectural Licenses: Allowing partners to build their own implementations based on ARM's ISA.
• Core Licenses: Licensing ARM's own CPU designs for integration into products.

5. Key Design Wins and Market Penetration

ARM's ascent to dominance is attributed to strategic design wins, notably with Nokia GSM phones and Apple's first iPhone. These milestones entrenched ARM’s position in the mobile and consumer electronics markets, which later expanded into data centers and AI applications.

Notable Quote:
Rene Haas (28:22):
“Once we found our way into the TI handset chipset that went into Nokia phone, now we have traction.”

6. Dominance Over x86 in Data Centers and AI

The conversation shifts to ARM’s competitive stance against Intel’s x86 architecture, particularly in data centers and AI workloads. ARM’s superior power efficiency and flexibility in custom SOC (System on Chip) designs make it an attractive choice for tech giants like Microsoft, Google, and AWS.

Notable Quote:
Rene Haas (51:20):
“If you just start with the fact that more and more chips are shipped every year and more and more of those chips are based on ARM… there's a ton of tailwind associated with this company.”

Rene asserts that ARM’s open licensing model and extensive software ecosystem provide significant advantages over x86, which is controlled by only two major players, Intel and AMD.

7. NVIDIA’s Attempted Acquisition and Regulatory Hurdles

A pivotal moment in ARM’s history discussed is Nvidia’s attempt to acquire ARM in 2020 for $40 billion. Rene explains the strategic importance of ARM and the extensive opposition from regulators and ecosystem partners, ultimately thwarting the acquisition. This incident underscored ARM’s critical role in the semiconductor landscape.

Notable Quote:
Rene Haas (63:37):
“There was a lot of opposition from regulators, customers, ecosystem partners, which I think belied kind of the importance of the company.”

8. Future Outlook: AI and Compute Subsystems

Looking ahead, Rene Haas emphasizes the burgeoning demand for ARM in AI and edge computing. ARM’s advancements in AI acceleration and subsystem integration position it to meet the growing needs of both data centers and diverse edge devices. ARM’s role is envisioned as central to the next wave of compute innovation, driven by AI’s insatiable demand for processing power.

Notable Quote:
Rene Haas (58:09):
“AI compute path is going to run through ARM in some way, shape or form.”

He also introduces ARM’s strategy around compute subsystems—comprehensive reference designs that integrate CPUs, GPUs, and other components—enabling faster time-to-market for customers.

Notable Quote:
Rene Haas (71:32):
“We can take that a step deeper, which we do in terms of we may work with a TSMC or a Samsung or an Intel and say we're going to actually now say, if you build it this way with these type of characteristics, we will guarantee that you will get 4.4 GHz of frequency output.”

9. ARM’s Continued Innovation and Ecosystem Support

Rene highlights ARM’s commitment to maintaining software compatibility and preventing fragmentation by disallowing custom instruction sets. This ensures a unified ecosystem where software can run seamlessly across various ARM implementations, fostering widespread adoption and innovation.

Notable Quote:
Rene Haas (43:36):
“We're never going to break the ISA. We're not going to allow people to add custom instructions, because once you do that, you break software compatibility.”

10. Conclusion: ARM’s Strategic Position and Growth Potential

In wrapping up, Rene Haas articulates ARM’s strategic advantages and the significant tailwinds propelling its growth. The convergence of AI, mobile computing, and data center demands positions ARM as a linchpin in the future of technology. With a robust licensing model, extensive ecosystem, and continuous innovation, ARM is poised to capture an increasingly substantial share of the trillion-dollar semiconductor market.

Notable Quote:
Rene Haas (55:57):
“We play in a super large market…. by the end of the decade, we probably could take a bigger chunk of that $1 trillion market.”

Key Takeaways

• ARM’s Pervasiveness: ARM chips are integral to a vast array of devices, from smartphones and IoT devices to data centers and AI applications.

• Strategic Business Model: ARM’s licensing and royalty model fosters widespread adoption and customization without the need for massive engineering investments by partners.

• RISC vs. CISC: ARM’s RISC-based architecture offers power efficiency and simplicity, making it ideal for modern, power-constrained applications.

• Competitive Edge Over x86: ARM’s open ecosystem and power efficiency give it a competitive advantage in emerging markets like data centers and edge computing.

• Future Growth in AI: The exponential growth in AI and compute demands positions ARM at the heart of future technological advancements.

This detailed summary encapsulates the rich discussions and insights shared by Rene Haas, providing a comprehensive understanding of ARM’s journey, strategic decisions, and future trajectory in the ever-evolving technology landscape.