ARM's latest architectural licence: sold to its first ever customer?

30 July 2008

ARM hinted about this deal in an analyst meeting last week, but the company this morning confirmed that it has sold an architectural licence for its processor architecture to "a leading handset OEM...to develop a roadmap of mobile computing devices". The company is not saying who the customer is but a lot of the signs point to Apple.

Nokia decided to outsource much of its silicon design and the company has traditionally bought the off-the-shelf ARM cores anyway, which Texas Instruments then put into system-on-chip (SoC) parts. Motorola already has an architectural licence. Samsung would be a possibility as the world's second largest chipmaker, but signed a big deal with ARM earlier this year to get early access to ARM's own designs.

Following Apple's purchase of chip design firm PA Semiconductor, ARM people have been particularly jumpy of late whenever Apple gets mentioned. And questions asking whether Apple already has an architectural licence (the computer maker was the driving force behind the creation of ARM and one of the original investors) were met with a "you'll have to ask Apple", rather than a "yes", a "no" or a "no comment".

PA's designers have a lot of experience with ARM, although their most recent offering, which is getting dropped like a stone, was based on the PowerPC. ARM's investor meeting is about to start. But, realistically, if the company was going to say that Apple is the new architectural licensee, it would have done so already.

ARM CEO Warrren East just warned that it will take time for the company to see royalties from any products sold that use the processors licensed under the new arrangement (9:20): "It is an architectural licence with a leading OEM for both current and future technology. Don't get too excited on any revenue on this: it will take some time. The revenue [from this deal] will be recognised over several years."

ARM's emphasis on this deal is that it is all about the future. Tim Score, CFO, said (9:38): "When ARM signs architectural licences, they are typically for an architecture that is already in play. So you tend to get a big revenue bump. This one is also for future architectures, so the revenue has to be spread over a number of years."