The Six Five team discusses Arm & Cadence Automotive Announcements.
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Transcript:
Patrick Moorhead: ARM and Cadence both had interrelated automotive announcement. ARM as we’ve seen recently, public company again just crushing it. If you remember, I think it was last month, Daniel, that the stock price just freaking rocketed after their earnings. And a lot of that has to do with getting new sockets, gaining market share, but it also has to do a lot with the sophistication of the IP that they’re offering. And essentially what they did on the automotive side is they brought out three things. So new automotive enhanced processors with the v9 architecture and the second was is putting CSS, which is their ARM compute subsystems, which is a product where they deliver more validation, requires less work on the licensee and they’re able to charge a higher price.
The third thing they did, which reminds me a little bit of what Qualcomm is doing with AWS is they’re enabling software testing that’s Cloud-based, as opposed to waiting the two years it might take to crank out a chip or a chiplet to be able to test. So now you’ve got ARM really going, and I like their expression of this, bumper to bumper all the way from an auto MCU, which is a very low-end controller that sometimes competes with an FPGA to zonal controllers. And that’s essentially, hey, something like braking system, right? If you have a disaggregated design to computer vision where they add the ISP and you can even add a third-party NPU to the cockpit, L-II and full autonomy. So ARM making a huge move here, if you look at their growth over the last couple quarters at least the discussion was, “Sure there was growth even in declining market and smartphones because you had people going with bigger cores,” but you had data center and you have automotive.
So good progress from the company. By the way, it was really cool to see ARM’s highest performance server processors, right? The same IP that’s used let’s say at AWS for Neoverse, sorry, ARM Neoverse used in Graviton being put in here. And I think this puts ARM and Qualcomm even at more odds I feel the two companies colliding. There was a related announcement by Cadence that essentially… So ARM doesn’t do the chiplet, but Cadence has a software development platform and a reference design for ADAS. So if you are a tier one, if you are a chip maker and you’re looking to increase and enhance time to market, you can use Cadence’s platform to do this.
And the other cool thing some people might know is Cadence actually has its own NPU and it’s called Neo Neural Processing Unit or NPU and then has an SDK called NeuroWeave for machine learning. And they also bring DSPs to the table. So not only can you use their tools, but you can also use Cadence’s IP to accelerate your ARM-based design. Isn’t it crazy how the new power players in there are IP companies and companies that you don’t even have to be a chip company, you could be a Tesla and use their software to pull all this stuff together.
Daniel Newman: Well, I think that’s really what it’s all about. Look, there’s the new power brokers and by the way, there’s a desire for the power broker to just pivot, right? Nobody wants to be over dependent. The world has seen… Let’s just talk about ARM’s announcements around vehicles. Well, first of all, ARM, it’s all about moving up the stack. It’s all about being more value add, more white glove, offering more services and being able to raise its core value, literally core value across everything it does and make more per core, per license and be able to bring more companies in to use its IP to develop chips. Look, we’re seeing a world where manufacturing of silicon used to be for a very small number of players and now you’re seeing that broaden and be democratized and companies and industry vertical solutions are being built. Chips for robotics, chips for IOT, chips for vehicles, chips for PCs, chips for wearables, hairables, VR, AR. And it’s opened the door to lots of companies creating unique designs. And these unique designs enable differentiation.
Historically speaking, there was a very small subset of chip manufacturers you could work with, and unless you had a certain size and scale of business, you couldn’t even consider building something custom. Well, now we’re seeing obviously what ARM’s enabling from a custom, what Cadence, Synopsis enable from an IP standpoint. We’re hearing companies like Marvell and maybe NVIDIA that are entering custom to help actually design custom chips. You’ve seen over time gaming console makers partnering up with companies like AMD to design custom chips for custom gaming console technologies. And over time the point is what it’s done is it’s opened up the world.
So there was a period where there was a few companies that could basically develop ADAS technology, build the silicon and then develop the software. And there was an era of NVIDIA, NVIDIA and Tesla. Then Tesla went out and they figured out it could do it on its own, because it got enough scale and size. It could design its own silicon. And you don’t think companies like BMW and GM and Ford and Stellantis are all looking at this right now. Right now a lot of them are partnering. Of course, we haven’t seen a design pipeline bigger than Qualcomm’s, but they’re looking at it. They’re looking and considering what gives them the ultimate amount of flexibility. This is why the digital chassis flexible building blocks is so important and ARM is saying, “Look, we’re going to offer something too. We’re going to enable this. We’re going to empower this.” This is what the future looks like and ARM is moving in that direction.
Having said that, ARM’s also getting more expensive. People are noting it. I think I saw something yesterday about SiFive having a super large bump in its licensing business this year. Why is that? Well, as ARM gained strength and has grown market and has more business and has driven more revenue and increased licensing value, there are more people looking for lower cost open-source options and you’re seeing it opened up the floodgates for RISC-V. This is an exciting world, Pat. This is an exciting demand-driven world where companies that really historically had nothing to do with chip making and chip design can find themselves in the chip making, chip design business because of what IP providers, licensing providers, fabs, foundries have basically opened up to the world. And, of course, with silicon eat in the world, Pat, this is pretty cool.
Patrick Moorhead: Yeah, some of the chip makers that were in the press release were Marvell, MediaTek, NVIDIA, NXP or an ACES, Telechips and TI. Note that Qualcomm is not in there. So essentially ARM is being the arms dealer to these companies related to the automotive space. Competition is good. I’m just amazed, Daniel, that the business model and the math works out for non chip makers, right? That’s got to be a little disturbing and we’ve never actually seen anybody talk about… So for instance, AWS doesn’t say, “Here’s how much money I put in and then here’s what I got out.” Either cost savings, time to market, something like that. But given that somebody like AWS has been doing it for so long, I sure can’t imagine that they would do something that lost money for 10 years.
Daniel Newman: Yeah. Well, I think this is going to be a really hot space to watch, Pat. I think it’s just getting very, very exciting and like I said, every new architecture, every new licensee and licensor of technology, it just goes to show, Pat, that while the world was thinking software would eat it, you and I knew what would really eat it. And I haven’t done a victory lap on that in almost a week. So let’s call it one more time right now just, hey, you know something about silicon.
Patrick Moorhead: I do, I do. Some people might say I don’t know something about silicon, but I don’t know, I just, for a company for 11 years that did Silicon, ran product management, product marketing, corporate strategy, go to market. What do I know, Dan? And before that I worked 10 years for a company where I specified which processors would go into my platform. I don’t know. What do I want? I was a customer, competitor, now I’m a pundit. I don’t know. What do I know? Let’s move to the next. By the way, sarcasm is what I learned in the Midwest. It’s what we do. It’s our humor to get over the sadness.
Daniel Newman: It’s my love language, Pat. Sarcasm is my love language.
Patrick Moorhead: Get over the sadness of there being no jobs.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
