ARM CO-Founder Blasts Intel, Predicts End Of Microprocessor Industry

ARM co-founder Dr. Hermann Hauser on Friday offered scathing opinions of Intel and predicted the end of the microprocessor industry.

’The reason why ARM is going to kill the microprocessor is not because Intel will not eventually produce an Atom that might be as good as an ARM, but because Intel has the wrong business model," said Hauser, a co-founder and shareholder of British semiconductor firm ARM Holdings, in an interview with The Wall Street Journal.

"People in the mobile phone architecture do not buy microprocessors," Hauser added. "So if you sell microprocessors you have the wrong model. They license them. So it’s not Intel vs. ARM, it is Intel vs. every single semiconductor company in the world.’

ARM claims the largest share of the mobile processor market. In the third quarter of 2010, ARM’s customers reported about a 35 percent increase in shipments of mobile handset chips compared to the third quarter of 2009. ARM earned 61 percent share of the mobile market in unit shipments in the third quarter of 2010. Ninety-five percent of the world’s mobile handsets and more than one-quarter of all electronic devices use an ARM chip.

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Hauser told The Wall Street Journal that the value of chips which ARM collects a royalty on has overtaken Intel’s microprocessor revenue this year for the first time. However, ARM has just 16 percent market share in the enterprise segment and 5 percent in the home segment.

An Intel spokesperson responded to the comments in an e-mail to CRN.

"Over a million PCs ship every day," the spokesperson said. "Intel microprocessors offer backwards and forward software compatibility that benefits 14 million developers."

Intel lost market share in the lucrative mobile processor market in the third quarter. The company’s market share fell to 85.9 percent in the quarter, down 1 percent compared to the third quarter of 2009.

Recently, former and current executives from ARM have been rather vocal when discussing Intel in the press.

Next: ARM Executives On Intel

Last week, ARM co-founder Tudor Brown acknowledged the threat that Intel poses to the company, while sounding optimistic regarding ARM's business model.

Earlier this month, the company's CEO Warren East publicly dismissed Intel's anticipated challenge in the mobile market, saying he expects ARM to continue to power the vast majority of tablets.

But Hauser went further, citing the history of industry trends and going beyond assuring that ARM will maintain its current position to suggesting it could overtake Intel in the broader processor market in the long-term.

’There is no case in the history of computing where a company that has dominated one wave has dominated the next wave and there is no case where a new wave did not kill the previous wave -- as in obliterate them," Hauser said. "The people that dominate the PC market are Intel and Microsoft.’

’If you look at the history of computing there was mainframe, which was dominated by IBM, then came the minicomputer dominated by DEC, then came the third wave with workstations dominated by Sun and Apollo, then the PC, and now it’s the mobile architecture that is going to be the main computing platform at least on the terminal side.

Hauser says Intel is looking to shift away from microprocessors and produce baseband processors for mobile phones as a result.

Intel in August acquired Infineon's wireless unit,< which makes chips that power the iPhone, in order to make up for a slow start in the mobile market.

The company is also preparing the Oak Trail platform for mobile embedded devices scheduled to appear next year.

’Whether they can morph themselves into a baseband company remains to be seen,’ Hauser said.