{"id":22479,"date":"2024-01-29T23:56:00","date_gmt":"2024-01-29T15:56:00","guid":{"rendered":"https:\/\/www.granitefirm.com\/blog\/us\/?p=22479"},"modified":"2025-01-10T09:56:55","modified_gmt":"2025-01-10T01:56:55","slug":"how-arm-make-money","status":"publish","type":"post","link":"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/","title":{"rendered":"How does the ubiquitous Arm make money?"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ffffff;color:#ffffff\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ffffff;color:#ffffff\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Introduction\" >Introduction<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Companys_history\" >Company&#8217;s history<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Acquired_by_SoftBank\" >Acquired by SoftBank<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Nvidias_acquisition_failed\" >Nvidia&#8217;s acquisition failed<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Stock_listing\" >Stock listing<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#IPO\" >IPO<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Relist\" >Relist<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Arms_operations\" >Arm&#8217;s operations<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Business_model\" >Business model<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Key_operating_indicators\" >Key operating indicators<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Without_Apple_there_would_be_no_Arm\" >Without Apple, there would be no Arm<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Arms_main_customers\" >Arm&#8217;s main customers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Apple_founded_Arm\" >Apple founded Arm<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Original_mission\" >Original mission<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Participated_in_IPO_fundraising_again\" >Participated in IPO fundraising again<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#The_most_successful_platform_in_RISC\" >The most successful platform in RISC<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#The_origin_of_Arm\" >The origin of Arm<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Make_money_using_intellectual_property_rights\" >Make money using intellectual property rights<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Intels_ARM_products\" >Intel\u2019s ARM products<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Dont_believe_the_iPhone_will_succeed\" >Don\u2019t believe the iPhone will succeed<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Give_up_Xscale\" >Give up Xscale<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Main_competitors\" >Main competitors<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#x86\" >x86<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#RISC-V\" >RISC-V<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-25\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Capital_market_performance\" >Capital market performance<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-26\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Whats_Arms_tracking_record\" >What&#8217;s Arm&#8217;s tracking record?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-27\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Share_price_looks_cheap_but\" >Share price looks cheap, but<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-28\" href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/#Related_articles\" >Related articles<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Introduction\"><\/span>Introduction<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Companys_history\"><\/span>Company&#8217;s history<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><a href=\"https:\/\/en.wikipedia.org\/wiki\/Arm_Holdings\" target=\"_blank\" rel=\"noreferrer noopener\">ARM<\/a> (ticker: ARM) is a semiconductor company headquartered in the UK. It was founded in 1990. The three main founding shareholders at that time were Acorn Computers, Apple (ticker: AAPL) and VLSI Technology.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Acquired_by_SoftBank\"><\/span>Acquired by SoftBank<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In 2016, SoftBank (ticker: SFBK) acquired Arm for US$32 billion and privatized the company.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Nvidias_acquisition_failed\"><\/span>Nvidia&#8217;s acquisition failed<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Nvidia (ticker: NVDA) tried to acquire Arm for US$40 billion in September 2020, but gave up the acquisition in February 2022 due to regulatory scrutiny and setbacks. Since the failure of the Nvidia acquisition, SoftBank has suffered losses; in the first quarter of 2023, SoftBank lost US$3.3 billion.<\/p>\n\n\n\n<p>Nvidia&#8217;s acquisition of ARM is a top priority in the semiconductor industry. For related analysis and discussion, please see my previous post &#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/06\/24\/nvidia-changes-gaming-rules\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does nVidia make money, Nvidia is changing the gaming rules<\/a>&#8220;.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Stock_listing\"><\/span>Stock listing<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"IPO\"><\/span>IPO<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In 1998, Arm was listed in London and became a component of the FTSE 100 Index; it also issued American depositary receipts and was listed on the Nasdaq.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Relist\"><\/span>Relist<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In order to get rid of Arm, a money-losing product, SoftBank allowed Arm to be listed again on September 14, 2023, seven years after it was acquired by Japanese conglomerate SoftBank. The offering price was $51, and the company&#8217;s stock price has been hovering around the IPO price amid concerns about declining revenue, shrinking operating margins and overvaluation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Arms_operations\"><\/span>Arm&#8217;s operations<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Business_model\"><\/span>Business model<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>ARM does not produce chips for sale on the market. Instead, it licenses the chip architecture it designs to other chip manufacturers instead of manufacturing chips. This is how the company earns its main revenue.<\/p>\n\n\n\n<p>Arm provides two business models, licensing and royalty:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The licensing model pays according to the number of IP authorizations, which is a one-time product authorization fee.<\/li>\n\n\n\n<li>The royalty model pays based on the number of wafers manufactured, and the fee is linked to sales volume.<\/li>\n<\/ul>\n\n\n\n<p>Royalty income has been Arm&#8217;s main source of income over the years.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_operating_indicators\"><\/span>Key operating indicators<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>According to the contents of Arm&#8217;s listing prospectus:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>As of the first quarter of 2023, Arm has 260 customers worldwide.<\/li>\n\n\n\n<li>Since its establishment, the company has shipped 250 billion chips based on Arm&#8217;s technology architecture.<\/li>\n\n\n\n<li>It has 15 million developers worldwide.<\/li>\n\n\n\n<li>70% of the world&#8217;s population uses chips based on Arm&#8217;s technology architecture.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Without_Apple_there_would_be_no_Arm\"><\/span>Without Apple, there would be no Arm<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Arms_main_customers\"><\/span>Arm&#8217;s main customers<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Almost all of Apple&#8217;s device products use ARM&#8217;s architecture, including the A-series chips for mobile devices and the M-series chips for Macs and high-end iPads. This makes Apple one of Arm&#8217;s largest customers.<\/p>\n\n\n\n<p>In September 2023, Apple and Arm signed a new agreement to extend the current cooperation relationship between the two parties &#8220;after 2040.&#8221;<\/p>\n\n\n\n<p>According to a report by the US media &#8220;The Information&#8221; on January 29, 2023, Arm&#8217;s revenue from Apple accounts for less than 5%, which is about half of Arm&#8217;s largest customers Qualcomm and MediaTek. Apple pays ARM an annual patent fee of less than $0.30 per device for the rights to use ARM\u2019s chips in hundreds of millions of iPhones, iPads, Macs and Apple watches. This is the lowest patent royalty among Arm\u2019s smartphone chip customers.<\/p>\n\n\n\n<p>At one point, Masayoshi Son called Apple CEO Cook and told him that ARM would increase charges for all of its major smartphone and chip customers. But Cook&#8217;s team assured him that ARM couldn&#8217;t raise the fee because the company&#8217;s contract at the time was valid until 2028, prompting Son to back down. Since then, Apple and ARM have conducted multiple rounds of negotiations, but the financial terms of the Apple deal have remained basically unchanged.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Apple_founded_Arm\"><\/span>Apple founded Arm<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Without Apple, Arm might not exist. As early as 1990, Acorn Computers, VLSI Technology and Apple formed a joint venture to form ARM.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Original_mission\"><\/span>Original mission<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The goal at the time was to challenge Intel&#8217;s x86 architecture with energy-efficient chip technology that was easy to program and expand. By prioritizing battery life and technical flexibility over computing power; this makes ARM-based chips more attractive to many mobile chip manufacturers than x86 chips. Currently, more than 95% of the world\u2019s smartphones use Arm-based chips<\/p>\n\n\n\n<p>This is why Apple used ARM-based chips in its first mobile computer, the Newton, in 1993.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Participated_in_IPO_fundraising_again\"><\/span>Participated in IPO fundraising again<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Apple has also become one of the 10 &#8220;cornerstone investors&#8221; along with AMD (ticker: AMD), Alphabet&#8217;s (ticker: GOOGL and GOOG) Google and Samsung, investing a total of US$735 million in its IPO. Tony Fadell, former senior vice president of Apple\u2019s iPod division, is also a member of ARM\u2019s board of directors.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_most_successful_platform_in_RISC\"><\/span>The most successful platform in RISC<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_origin_of_Arm\"><\/span>The origin of Arm<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Arm was originally the abbreviation of &#8220;Acorn RISC Machine&#8221; because its first product was a reduced instruction set computer (RISC) chip for Acorn computers. But when Acorn was founded in 1990, it changed its abbreviation to &#8220;Advanced RISC Machine&#8221; to focus on a broader market beyond Acorn.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Make_money_using_intellectual_property_rights\"><\/span>Make money using intellectual property rights<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Over the next three decades, ARM&#8217;s RISC designs continued to evolve to meet the needs of different chip manufacturers. Arm has also made its instruction set architecture (ISA) a proprietary, specially customized platform, which allows it to collect royalties and licensing fees from all Arm-based chip manufacturers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Intels_ARM_products\"><\/span>Intel\u2019s ARM products<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Dont_believe_the_iPhone_will_succeed\"><\/span>Don\u2019t believe the iPhone will succeed<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Intel investors remember that it lost the mobile chip market to ARM because Intel was arrogant and stubborn in believing that its x86-based Atom chips could fully support smartphones, tablets, and the Internet of Things. device. Intel also refused to produce an Arm-based CPU for Apple&#8217;s first iPhone because Intel did not believe the iPhone would be successful.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Give_up_Xscale\"><\/span>Give up Xscale<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>Intel also sold its Xscale division based on the Arm architecture to Marvell Electronics (ticker: MRVL) in 2006. This seemed like a good idea at the time because it freed up more resources for the development of Intel&#8217;s own Atom chips, but it turned out to be this. It was one of the biggest strategic mistakes in Intel&#8217;s history, and it caused Intel to widely miss the massive shift from PCs to mobile devices.<\/p>\n\n\n\n<p>If Intel had expanded its Xscale unit and used its dominance in the PC and server markets to sell it, the current semiconductor market would be very different.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Main_competitors\"><\/span>Main competitors<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"x86\"><\/span>x86<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The x86 chip platform represented by Intel (ticker: INTC) and AMD is Arm&#8217;s number one opponent. Different from Arm&#8217;s RISC architecture, x86 is one of the few CISC chip architectures that is still widely used. Especially in the field of personal computers and servers, x86 is still the dominant force.<\/p>\n\n\n\n<p>Although manufacturers have continued to promote the use of Arm platform technology in the past few decades and launched a large number of personal computers, except for Apple, such personal computers using Arm platform technology have never aroused consumer interest.<\/p>\n\n\n\n<p>It\u2019s not an exaggeration to say that ARM\u2019s success in mobile devices was caused by Intel\u2019s arrogance. However, Arm still lags far behind the x86 chip platform in areas other than mobile devices. This should remain impossible to change in the foreseeable future.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"RISC-V\"><\/span>RISC-V<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>However, ARM&#8217;s licensing fees have prompted some chipmakers to revisit open source RISC architectures to develop new energy-efficient designs. The largest RISC-based project is RISC-V, a platform developed at the University of California, Berkeley over the past decade.<\/p>\n\n\n\n<p>In recent years, several technology giants including Alphabet, Nvidia and Western Digital&nbsp;(ticker: WDC) have begun developing RISC-V chips. Arm acknowledged in its IPO filing that many of its customers &#8220;are also major supporters of the RISC-V architecture and related technologies,&#8221; and Arm warned that they &#8220;may choose to use this free open source architecture instead of our products.&#8221; .\u201d<\/p>\n\n\n\n<p>New open source chip design platforms may undermine Arm&#8217;s long-term growth, and RISC-V is the most critical force. Moreover, RISC-V, a new open source chip design platform, has become Arm&#8217;s main competitor in many fields. Especially in China, the United States has used various reasons to block China&#8217;s semiconductor development, forcing China to become the most successful market for RISC-V development. This is a top priority that makes Arm uneasy.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Capital_market_performance\"><\/span>Capital market performance<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Whats_Arms_tracking_record\"><\/span>What&#8217;s Arm&#8217;s tracking record?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Senior U.S. stock investors all know that Arm was listed on the U.S. stock market. Before being acquired by Software Bank and delisted (Armou already had a considerable market share at that time), Arm&#8217;s previous performance in the US stock market was actually not very good, unless you are a professional or a professional semiconductor investor, generally Investors don&#8217;t even know this stock exists.<\/p>\n\n\n\n<p>Keep in mind! Generally speaking, listed stocks with excellent performance will not be delisted unless there are very special reasons, and they will not be willing to be acquired.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Share_price_looks_cheap_but\"><\/span>Share price looks cheap, but<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Arm&#8217;s market share is increasing, but the stock price is expensive. There is no doubt that Arm&#8217;s adoption rate is increasing compared to x86; but whether its stock price is justified is another matter. The stock currently trades at more than 55 times 2024 earnings expectations, or forward price-to-earnings ratio. This number is far higher than Nvidia, a popular semiconductor company in the US stock market today &#8211; in fact, it is almost twice the forward price-to-earnings ratio of Nvidia!<\/p>\n\n\n\n<p>Although Nvidia uses ARM in its Grace CPU chips, ARM is not part of Nvidia&#8217;s core GPU products, which account for the vast majority of Nvidia&#8217;s eye-popping revenue figures. So while Arm is definitely an interesting asset-light growth company, it&#8217;s still a very expensive stock. When the valuation multiples of other top semiconductor companies such as Nvidia are much lower, it further shows how unreasonable its valuation is.<\/p>\n\n\n\n<p>Although Nvidia uses ARM in its Grace CPU chips, ARM is not part of Nvidia&#8217;s core GPU products, which account for the vast majority of Nvidia&#8217;s eye-popping revenue figures. So while Arm is definitely an interesting asset-light growth company, it&#8217;s still a very expensive stock. When other top semiconductor companies like Nvidia trade at much lower valuation multiples<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"119\" height=\"36\" src=\"https:\/\/www.granitefirm.com\/blog\/us\/wp-content\/uploads\/sites\/2\/2023\/11\/a.jpg\" alt=\"Arm\" class=\"wp-image-22480\"\/><figcaption class=\"wp-element-caption\">credit: ARM<\/figcaption><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Related_articles\"><\/span>Related articles<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/10\/06\/arm-and-qualcomms-lawsuit\/\">Arm and Qualcomm\u2019s IP licensing lawsuit set to be settled<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/24\/top-vendors-and-uses-of-gpu\/\" target=\"_blank\" rel=\"noreferrer noopener\">Top vendors and uses of GPU<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/06\/20\/arm-relisted\/\">Arm relisted successfully and it&#8217;s ushering in its best days<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/07\/02\/asic-getting-bigger\/\" target=\"_blank\" rel=\"noreferrer noopener\">ASIC market is getting bigger, and related listed companies in the US and Taiwan<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/29\/how-arm-make-money\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does the ubiquitous Arm make money?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/01\/29\/arm-acquired-by-nvidia\/\">Why nVidia failed to acquire ARM?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/11\/30\/tsmc-negative-corp-culture\/\" target=\"_blank\" rel=\"noreferrer noopener\">TSMC negative corp culture and management style are detrimental to its future and growth<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/05\/31\/ai-benefits-industries\/\" target=\"_blank\" rel=\"noreferrer noopener\">Artificial intelligence benefits industries<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/04\/10\/four-chip-companies\/#google_vignette\" target=\"_blank\" rel=\"noreferrer noopener\">Four chip companies account for one-third of S&amp;P 500 gains so far this year<\/a><\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/04\/06\/artificial-intelligence-listed-companies\/\" target=\"_blank\" rel=\"noreferrer noopener\">Top five lucrative artificial lucrative intelligence listed companies<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2025\/01\/09\/tsmc-valuation\/\">Why is TSMC valuation much lower than US peers?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/04\/01\/tsmc-dcf-value\/\">What&#8217;s TSMC DCF intrinsic value?How to calculate it quickly with a free tool?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/10\/01\/how-many-fab-does-tsmc-have\/\" target=\"_blank\" rel=\"noreferrer noopener\">How many fabs and houses does TSMC have currently and in the future?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/05\/13\/yield-rate-comparison\/\" target=\"_blank\" rel=\"noreferrer noopener\">Comparison of TSMC, Samsung, Intel&#8217;s Yield and Advanced Process<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/04\/29\/cost-of-chip-foundry\/\">The TSMC cost, sell price, and R&amp;D cost of chip foundry<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/01\/15\/asml-who-really-caught-tsmcs-neck\/\" target=\"_blank\" rel=\"noreferrer noopener\">ASML, who dominate TSMC\u2019s fate<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/12\/28\/tsmc-process-roadmap\/\" target=\"_blank\" rel=\"noreferrer noopener\">Comparison of SMIC, Rapidus, TSMC, Intel, and Samsung\u2019s new process roadmaps for future chips<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/07\/30\/two-long-term-threats-to-tsmc\/\" target=\"_blank\" rel=\"noreferrer noopener\">Two long-term threats to TSMC: US and SMIC<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/06\/30\/tsmcs-profit-margin\/\" target=\"_blank\" rel=\"noreferrer noopener\">Why is TSMC\u2019s profit margin much greater than competitors?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/08\/13\/how-does-tsmc-make-money\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does TSMC make money?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/11\/02\/zyvex\/\" target=\"_blank\" rel=\"noreferrer noopener\">Zyvex and sub-nanometer semiconductor processes, will Zyvex threat TSMC?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/01\/28\/tsmc-serious-crises\/\">TSMC gets emerging&nbsp;and serious challenges<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/06\/24\/nvidia-changes-gaming-rules\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does nVidia make money, Nvidia is changing the gaming rules<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/12\/11\/nvidias-monopoly\/\" target=\"_blank\" rel=\"noreferrer noopener\">The reasons for Nvidia\u2019s monopoly and the challenges it faces<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/01\/29\/arm-acquired-by-nvidia\/\">Why nVidia failed to acquire ARM?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/07\/02\/revisiting-nvidia\/\">Revisiting Nvidia: The Absolute Leader in Artificial Intelligence, Data Center, and Graphics<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/05\/25\/will-intel-go-bankrupt\/\" target=\"_blank\" rel=\"noreferrer noopener\">Will Intel go bankrupt?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/10\/30\/how-does-intel-make-money-and-the-benefits-to-invest-in-it\/\">How does Intel make money? and the benefits to invest in it<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/11\/05\/intels-current-difficult-dilemma\/\">Intel&#8217;s current difficult dilemma<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/25\/how-does-micron-make-money\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does Micron make money? What investors should know?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/11\/22\/texas-instruments-bio\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does Texas Instruments make money? Amazing long term capital reward and company net profit margin!<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/04\/22\/amd-make-money\/\" target=\"_blank\" rel=\"noreferrer noopener\">How AMD makes money? A rare case of turning defeat into victory<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/02\/05\/amd-jaw-dropping\/\" target=\"_blank\" rel=\"noreferrer noopener\">Why is AMD\u2019s performance so jaw-dropping?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/05\/01\/qualcomm-diversifies\/\" target=\"_blank\" rel=\"noreferrer noopener\">Qualcomm diversifies success, no nonger highly dependend on phone<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/07\/23\/significant-changes-in-broadcoms-business-approach\/\" target=\"_blank\" rel=\"noreferrer noopener\">Significant changes in Broadcom\u2019s business approach<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/03\/04\/data-center-a-rapidly-growing-semiconductor-field\/\">Data center, a rapidly growing semiconductor field<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/04\/18\/applied-materials\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does Applied Materials, lord of semiconductor equipment, make money?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/08\/12\/lam-research-chip-equipment\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does Lam Research, top chip equipment player, make money?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2021\/09\/25\/the-lucrative-semiconductor-industry\/\" target=\"_blank\" rel=\"noreferrer noopener\">The lucrative semiconductor supply chain<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/01\/25\/global-semiconductor-chip-market-in-detail\/\" target=\"_blank\" rel=\"noreferrer noopener\">Global semiconductor chip market in detail, big dominators and markets<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/05\/07\/semiconductor-investment\/\" target=\"_blank\" rel=\"noreferrer noopener\">6 common wrong semiconductor investment myths<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2022\/09\/23\/3rd-gen-semiconductor\/\" target=\"_blank\" rel=\"noreferrer noopener\">Gen 3 semiconductor<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/06\/14\/eda-synopsys-cadence-mentor\/\">Three EDA oligopoly vendors: Synopsys, Cadence, and Mentor Graphics<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2024\/01\/22\/how-cadence-make-money\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does, the EDA oligopoly, Cadence make money?<\/a>&#8220;<\/li>\n\n\n\n<li>&#8220;<a href=\"https:\/\/www.granitefirm.com\/blog\/us\/2023\/12\/22\/how-synopsis-make-money\/\" target=\"_blank\" rel=\"noreferrer noopener\">How does Synopsis, the EDA oligopoly, make money?<\/a>&#8220;<\/li>\n<\/ul>\n\n\n\n<p><em><strong>Disclaimer<\/strong><\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>The content of this site is the author\u2019s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.<\/em><\/li>\n\n\n\n<li><em>I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers&#8217; direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.<\/em><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Without Apple, there would be no Arm<\/p>\n","protected":false},"author":1,"featured_media":22480,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[110,279,54,53,548,346],"tags":[2,348,556,97,95,41,433,169,1143,555],"class_list":["post-22479","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-semiconductor","category-adr","category-generic-us-stock-knowledge","category-ipo","category-monopoly","category-pe-ratio","tag-aapl","tag-amd","tag-arm","tag-goog","tag-googl","tag-intc","tag-mrvl","tag-nvda","tag-sfbk","tag-wdc"],"_links":{"self":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/22479","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/comments?post=22479"}],"version-history":[{"count":29,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/22479\/revisions"}],"predecessor-version":[{"id":33150,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/posts\/22479\/revisions\/33150"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media\/22480"}],"wp:attachment":[{"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/media?parent=22479"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/categories?post=22479"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.granitefirm.com\/blog\/us\/wp-json\/wp\/v2\/tags?post=22479"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}