Intel sells stake in chip designer Arm Holdings | Hacker News Reader

Intel sells stake in chip designer Arm Holdings

reuters.com

83 pointstithe72 comments

Don’t read too much into this. Tiny stake that’s not material in terms of Intel’s finances.

Bought at the time of Arm’s float to show confidence in Arm and that Intel is a key partner - which it wants to be in the shape of Intel Foundry.

Changes nothing material in the relationship. More of a tidying-up exercise with a small profit than anything else.

Edit: This is a much more interesting story on the development of the Softbank / Arm / Intel relationship.

SoftBank scraps AI chips tie-up plan with Intel.

https://news.ycombinator.com/item?id=41265804

I feel like this is the exact opposite of what they should be doing.

They should start producing ARM chips. They could finally get a piece of the smartphone market, which would not cannibalize their x86 sales (which I assume is the reason why they have refused to use ARM since the sale of xScale).

First, how does selling stock prevent them from doing that? Second, switching to Arm doesn't automatically give them a competitive microarchitecture for smartphones.

I agree it doesn't prevent them, but if they were to join the ARM train, I don't think they would have sold.

Does Intel have a competitive microarchitecture in Pc chips at the moment? Arguably, no, they stay afloat with brand recognition and OEM deals.

May be they are simply selling the ARM stock now because it is over priced?

>I don't think they would have sold.

Because?

> Does Intel have a competitive microarchitecture in Pc chips at the moment? Arguably, no

Their last gen laptop chips seem to be pretty competitive both with AMD and Qualcomm. They moved some of the manufacturing to TSMC though…

Intel seems to be pretty decent at designing chips but not very good at making them these days.

Let Intel and ARM be Intel and ARM. Investors can diversify or hedge without Intel’s help.

The problem is that the barrier to entry to producing ARM processors isn't that high. ARM will allow anyone who is paying the licensing fee to become a licensee, and then you can build at TSMC or Globalfoundries or any other fab that will take you.

Intel can't compete in that market. The margins are too low: they're organized and staffed to a higher margin business. They're used to the high operating margins of x86. Now that their competition (mainly AMD) has become competent in the past ten years and x86 is decreasing in importance, they're losing their main competitive advantage.

What's their way out then? Pray that AMD messes up and stops making competitive chips?

What if they used their resources and expertise to push RISC-V into a position that it could compete in the mobile and datacenter markets?

You mean intel? Then they’d be moving into an even lower margin business.

If you mean ARM… then they’d be helping the competition

They can do that with ARM as well, the license cost won't bother Intel. The parent argument regarding lack of margins stands.

What would they ever gain by that?

If they can’t build decent x86 chips when they only have a single competitor switching to an inferior architecture (in the sense that it would require massive investment for it to catch up with x86) with no entry barriers for new competitors would be one of the most absurd things they could ever do.

Pay large salaries to the executives and lobby the government for more funding while their competition accelerates away.

You joke, but if past is any indicator..

Actually invest and invest hard in new technologies, cutting off fat and even muscle if that must be done.

There is a reason Intel Foundries is belching red ink while the rest of Intel is getting Gelsinger'ed to stave it.

> The margins are too low: they're organized and staffed to a higher margin business.

Intel has a massive fab capacity problem right now, in that their fabs aren't being utilized. Doing manufacturing of a high-volume product is exactly what they need, and if that high volume product is their own - all the better.

Intel has a massive fab capacity problem because their fabs are too retarded[1] now even for themselves[2], let alone others in the market.

[1]: https://www.merriam-webster.com/dictionary/retard

[2]: https://www.techpowerup.com/323700/tsmc-begins-3-nm-producti...

Are there any US fabricators of ARM chips? Any fabricators in any Western nation? If not, Intel could have tapped into the markets for defense and national security.

Globalfoundries among others.

TI, Microchip, NXP, STMicro, ...

A lot of people don’t remember that Intel was a huge early ARM licensee. If you were building a smart mobile device 25 years ago, you were probably seriously considering the Intel StongARM SoC. They then followed up on this with the more advanced ARM XScale family of SoCs, which you’d likely use if wanted to build a ARM battery-powered smart device in the early 2000s. Background per Wikipedia:

> The StrongARM is a family of computer microprocessors developed by Digital Equipment Corporation and manufactured in the late 1990s which implemented the ARM v4 instruction set architecture. It was later acquired by Intel in 1997 from DEC's own Digital Semiconductor division as part of a settlement of a lawsuit between the two companies over patent infringement. Intel then continued to manufacture it before replacing it with the StrongARM-derived ARM-based follow-up architecture called XScale in the early 2000s.

However, after developing and manufacturing these for nine years, Intel exited this business by selling their ARM unit to Marvell. Intel was developing its own “low power” x86 chip, the Atom, and decided to put all its mobile eggs in that basket, which unfortunately was never as low power as comparable ARM designs. I suspect Intel also saw that the number of licensees in the ARM market was growing and competition along with it, their value-add wasn’t that great, and their margins were necessarily smaller due to the ARM licensing fees.

I remember they, at some point, sold their perpetual license (was it with the Marvel deal?). Before that, IIRC, they didn’t need to pay volume-based licensing to make their ARM variants.

Intel is not under the impression that ARM is winning the architecture battle, you are.

But did you know there are many new core designs every year, and that very few of them are from ARM?

Second, it's very likely that your smartphone won't be ARM starting in the next few years. You'll notice when your battery suddenly lasts longer.

What are these new core designs, if not ARM?

What will be replacing ARM in smartphones in the next few years?

If you’re going to say RISC-V, what leads you to believe that huge performance and power leaps will take place from what RISC-V is today?

So Qualcomm's Arm-based laptops that last 2-3 times longer than the equivalent x86 laptops is just a figment of everyone's imagination?

> So Qualcomm's Arm-based laptops that last 2-3 times longer than the equivalent x86 laptops

Do they though? Anything to back this up?

They seem to last 10-20% than Meteor Lake chips with somewhat better CPU performance and worse GPU.

> But did you know there are many new core designs every year, and that very few of them are from ARM?

Really? It took years for Qualcomm to become competitive with ARM’s cores again. Besides them and Apple what else is there? (Ampere I guess, but they are still insignificant and in an entirely different segment)

Making ARM would make very little sense. In x86 they have to differentiate against AMD. With ARM they need to differentiate and compete with the whole rest of the industry.

It’s also symbolic - Intel’s goal is to outcompete ARM (and AMD, Nvidia) in personal computers and the datacenter market. Divesting from ARM Holding sends a signal there is no upside for Intel coming from ARM’s progression up the processor chain.

Too late for that. Smartphone SoCs is a low margin business that controlled by Qualcomm (or in-house like Apple, Google and Samsung to some extent) on the high-end and it would absurd for Intel to try and compete for the low-end/budget market.

Yeah, they had the chance to dominate the ARM market with XScale but that ship has long sailed.

Also how is having a small, insignificant stake in ARM itself related to this anyway?

This isnt to surprising. They need money to continue their transition to their new Royal CPU baseline and frankly everyone and their dog is now in the ARM market, if they want to see growth its time to move onto something else.

Need the money is rarely sound reasoning strategically

It is when your products are trailing competitors on both fronts (AMD and Nvidia) and are facing potential class action lawsuits over existing products (13th and 14th gen CPUs).

The thing is that this is a tiny amount in the grand scheme of things. It's been a while since I looked at the financials, but IIRC it was something like $33b per year of revenue, and $26b per year for R&D. Selling off ARM is something like a day's revenue, so it won't have been done just to raise a bit of cash, more just a recognition that it has nothing to do with their core business right now or their future plans.

From those approximate figures above (that I probably misremembered), personally I wouldn't worry too much about Intel short-term. They can get back to positive cash flow quite quickly by reducing the R&D expenditure quickly as long as they get over the PR headache of the current gen chips, and seemingly the new microcode is reducing peak voltage spike on single/two-thread loads. There's a lot of bad press right now, but the majority of business comes from data centres who probably weren't cranking all the overclocking levers and I'd guess any recalls will almost all be from the much smaller ultra-keen gamer segment.

Longer term, there's a risk if they cut the R&D spending too much and then find it hard to re-hire those engineers, but there's a good chance they'll get competitive again when they finally get their new process working, and that might be what they need to finally get their TDP levels back competitive with AMD again. It's worth watching the Asianometry video about backside power delivery - if they get this right, there's a very good chance of future Intel chips being more power efficient than AMD's.

It’s just a bit over $100mil. An insignificant on the grand scale of things.

Also ARM’s valuation is not exactly rational (their business model is pretty poor) so it seems like a reasonable time to sell

outsource core competencies, sell good investments, deliver flawed projects, ride the hype that your CEO once was involved in a historical CPU.

Maybe it's time to buy puts on INTC.

Intel just keeps going farther down the drain, much like another American mainstay, Boeing. At least Intel isn't killing hundreds of people in fiery crashes, or having pieces of their CPUs falling off during use.

> or having pieces of their CPUs falling off during use.

Instead they were commiting suicide by requesting 1.6 volts so they can push 250 watts to win some benchmarks and die in 6 months.

Judging by some of the CPU issues coming out of Intel these days, the fiery crashes are not far off.

I remember learning about CPU design and manufacure as a kid and was absolutely astounded that any of this shit could be made to work in a practical way. In my eyes Intel was immaculate perfection.

I felt the same way about car engines

> outsource core competencies

I was shocked when I learned that the majority of the Meteor Lake CPU is made by TSMC and that for the next gen Lunar Lake due in September EVERYTHING except the base tile (which is just a 22nm PCB) will be made by TSMC.

Wow. Then, they should sell off the fabs, just throwing in a commitment to use them for the older products as a sweetener. If they are using TSMC for the latest gen, the advantage of being an integrated company is gone; and both parts would be better off being run purely for their own market.

The US wants the Intel fabs to be a going concern for strategic reasons but even for them it would be better to put in the investment to make it so, than have them wither away inside intel.

I definitely want my tax dollars (CHIPS monies) clawed back from Intel since among those recently getting laid off is R&D, right when Intel needs all the R&D brains and hands they can get.

> Maybe it's time to buy puts on INTC.

Just as likely that it’s way too late for that now…

Also is ARM really a good investment? They are massively overvalued and don’t have a very good business model.

ARM makes peanuts compared to other chip companies and they can’t really raise prices that much.

Most of their value is in IP but nobody will be allowed to buy them anyway.

HN often gets caught up in emotional highs and lows. Remember the talk here about Facebook in 2021? I’m feeling bullish.

Bummer this was the most valuable part of Intel.

You know, I do believe this ship may sink.

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