By Jonathan Chen
ARM Holdings (ARMH) is aggressively moving into the notebook industry, where Intel has long been the dominant player. With Windows 8 moving to ARM-based chips, the competition between ARM and Intel is going to heat up in 2013, as ARM's chips become more and powerful.
When Microsoft (MSFT) announced that Windows 8 would be able to run on both ARM-based chips, as well as Intel, this was a huge blow for Intel, which was historically been the gorilla in the semiconductor industry. Apple (AAPL) relies heavily on ARM based chips, which consume less power and have longer battery lives, for its iPhones and iPads. Many smart phones and tablets also use ARM-based chips, giving ARM's intellectual property a huge leg up in the mobile industry.
ARM also recently announced new chips which are more powerful and consume less power than predecessors, further closing the gap with Intel.
There has been reports that Apple was testing a MacBook Air with ARM chips, but so far we have not seen that come to market. It does not mean it will not happen - it just hasn't happened yet. Apple has threatened Intel to improve performance or risk losing its business before, so Apple clearly sees the problem with Intel's performance issues.
Intel chips are notorious for consuming more power, which is why Intel has had a tough time getting into the mobile market. Texas Instruments (TXN), NVidia (NVDA), and Qualcomm (QCOM) all make ARM-based chips. Nvidia reported exceptionally strong earnings last night, and said that demand for its Tegra chips are extremely strong.
In a company release, Jen-Hsun Huang, president and CEO NVIDIA said, "Our GPU business accelerated in the third quarter, driven by strong demand from gamers and the professional market. And our mobile business benefited from new devices coming onto the market." If Nvidia is seeing strong demand and accelerating business in the quarter, this means that ARM-based chips are starting to pick up more and more contract wins.
Microsoft and Intel were known as "Wintel" back in the 1980's, 1990's and even the early 2000's, as both companies dominated the PC market for years. Then consumers started to want choices and better performance, and both companies have not really changed to the market needs and wants. Microsoft moving Windows 8 to ARM-based chips will help companies like Qualcomm win laptop orders. That will not only benefit Qualcomm, it will benefit ARM Holdings, as Qualcomm chips are based on ARM designs.
ARM receives royalties for all ARM-based chips sold around the world. It's the reason that ARM shares have done exceptionally in recent years, as the growth of ARM-based chips in smart phones and tablets have helped the chips capture market share from Intel.
The "Wintel" monopoly may not come to an end tomorrow, but "WinArm" is knocking on the door. 2013 should certainly be a very interesting year.
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