It’s been a good week for ARM Holdings (ARMH), the British company that designs the microprocessors found in most smartphones and tablets. Microsoft (MSFT) unveiled the Windows RT version of its new Surface Tablet, which will include an ARM-based microprocessor, and Freescale (FSL) announced a new group of microcontrollers based on ARM Cortex architecture, a significant move for the chipmaker that has long relied on its proprietary core designs.
ARM CEO Warren East told RCR Wireless News this week that he expects ARM-based designs to account for half of worldwide microprocessor shipments within five years. East said the only caveat to that prediction is the growth rate of the overall microprocessor market, which grew 14% in 2011, according to Gartner Research. East says he has a pretty good idea of how fast his business will grow, but the overall market could grow even faster.
ARM has roughly 900 microprocessor licensees today, according to East, and so far just over half of those are shipping products and generating royalties for ARM. As more of these licensees ship product, ARM’s market share should grow. Currently, East says that 30% of the microprocessors shipped worldwide are ARM designs.
The big question, of course, is where Intel (INTC) fits in. The semiconductor giant was late to the mobile processor party, but is gaining ground fast. Unlike ARM, which licenses designs to manufacturers, Intel designs and produces chipsets.
“The competition is between Intel and, frankly, the rest of the semiconductor industry,” East told an audience this week at the Freescale Technology Forum. “ARM is used by pretty much the rest of the semiconductor industry, and even in some parts of Intel. This is not a David and Goliath story.” (Of course it might not be such a bad thing for ARM if it were. Remember how that story ends.)
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Full disclosure: The author owns ARMH stock.