Arm Holdings
stock has staged a two-day 8.5% rally on speculation that the newly public chip design company could get a boost from an expansion in the number of companies producing microprocessors for
Microsoft
Windows-based personal computers using Arm technology.
Qualcomm
(ticker: QCOM) is the only chip maker licensed by Microsoft (MSFT) to produce Arm-based processors for Windows PCs, but that arrangement expires next year.
On Monday, Reuters reported that both
Nvidia
(NVDA) and Advanced Micro Devices (AMD) are developing their own Arm-based processors for Windows PCs and could start shipping in 2025. The PC processor market is dominated by x86-based designs from Intel (INTC) and AMD (AMD).
The companies aren’t commenting on the report, which Reuters attributed to two people familiar with the matter.
It’s worth noting that Nvidia signed a 20-year licensing agreement with Arm that survived the 2022 termination of the proposed acquisition of Arm by Nvidia. AMD is also a longtime Arm licensee. Neither has been making Arm-based PC chips.
In a research report, NewStreet Research analyst Pierre Ferragu wrote that he thinks it will be “extremely difficult” for Arm (ARM) to gain traction in the PC market.
The analyst noted that so far only
Apple
has found success in adopting Arm-based processors for laptops and desktops. But he added that Nvidia’s reported interest in making Arm-based PC processors “should be taken seriously.” He pointed out that “tighter integration between GPU and CPU is a powerful value proposition, especially for gaming and 3D graphic design laptops.”
Ferragu sees the potential entrance of Nvidia into the CPU market as “a material headwind” for both Intel and AMD.”
In a research note, Wells Fargo analyst Aaron Rakers wrote that it makes sense for Nvidia and AMD to target Arm-based chips as PC manufacturers increasingly focus on AI computing capabilities. He noted that, according to Mercury Research, Arm-based PCs—including Macs—were 12% of the market over the 12 months through June 30, versus 9% a year earlier and 2% two years ago.
Wedbush analyst Matt Bryson said in a research note that a decision by both Nvidia and AMD to start making Arm-based PC chips would be “a potential concern” for Intel, but that the company’s future results will be driven primarily by progress in building out its foundry business.
Write to Eric J. Savitz at [email protected]
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