News & Analysis
Counterpoint: Synergies could trigger a Synopsys-ARM merger
Jonah Probell
10/13/2009 5:46 AM EDT
Semiconductor intellectual property (IP) is a way for chip makers to share the cost of developing standard designs so that they can invest more in the differentiating features of their chips. For ARM to be controlled by any one of its customers or even a small group of its customers would break the IP business model.
ARM will certainly harvest splendid royalty payments from chip designs in a wide range of consumer electronics, including netbooks, smartbooks, and notebooks. Presumably that expectation is built in to ARM's current market valuation. As the strong market share leader in its field, ARM needs to provide standards-based product offerings beyond just processor cores.
Towards that goal ARM has taken actions such as building or acquiring semiconductor IP cores for commonly used peripherals such as SDRAM interfaces and accelerators such as their Mali line for 3D graphics. An even more insightful move by ARM was their 2004 acquisition of Artisan, the leading makers of the standard cell libraries essential for synthesizable logic design for chips.
Like the semiconductor IP business, the EDA business is a key enabler of chip designs. EDA tool vendors allow semiconductor companies to share the cost of developing tools to design chips. Recently, Synopsys (Mountain View, Calif.) has taken a strong lead in its field of three major EDA vendors and must now reach beyond its main product lines in order to find new value to offer its customers.
Synopsys and ARM have largely complementary product offerings. The two companies have collaborated on various projects including jointly funded research, cooperation within industry standards bodies, and the writing of chip design best practices books that carry a combined logo of the two companies. Only after recent speculation about the two companies' relationship did all web images of the combined logo disappear.
The synergies between ARM and Synopsys make for a logical tie-up. Both are approximately the same size, and a merger would likely create an entity worth more than the sum of its parts.
Jonah Probell is CEO of YAP IP, a processor architect, and an analyst of the semiconductor IP, digital video, and consumer electronics markets. He can be reached at jonah@jonahprobell.com
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Peter Clarke
10/13/2009 6:32 AM EDT
And if anyone has a copy of the Synopsys-ARM "combined logo" that Jonah Probell mentions, we'd love to see it. I am pclarke@techinsights.com
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garydpdx
10/13/2009 1:20 PM EDT
Such a merger would actually stifle market share for both ARM and SNPS. Adopting ARM would push designers into Synopsys-based flows, which may not fit their needs and means. Or adopting Synopsys-based flows would be felt to compromise designs that didn't use ARM processors. These two companies have been operating well separately, serving their customers with orthogonal offerings.
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TechnoMarketeer
10/14/2009 7:06 AM EDT
Any chance this speculation is Intel inspired? Its the sort of tactics they'd benefit from as it would undermine ARM's ecosystem confidence which is probably ARMs biggest asset and for SoC designs (which Ortellini stated at IDF could outsell IA microprocessor sales in the next 5 years) is a critical route to market. Intel does not even have the beginnings of this ecosystem, they need to get into it, and raising questions about ARMs traditional market positioning could open cracks that allows them to get the toehold they are so obviously going to need.
Just a thought.....
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TechnoMarketeer
10/15/2009 5:08 AM EDT
Hmm, see this http://www.embedded.com/220600324?pgno=1 which is a much better explained perspective on the analysts PoV. His view that the current market valuation versus its leveragable market value coupled with a broad stock availability makes them a acquisition risk, his idea that current licensee's may have to form a consortium to avoid such a destructive attack is worth considering.
He's is fiscal analyst, sometimes it takes posing an idea to help an idea gain market traction - question is...who gains?
This is fiscal vultures circling, and whats best for licensee's and customers will be brought sharply into contrast with whats good for the shareholders...and ultimately the execs have to do whats right for the shareholders.....it could get ugly for this market segment.
I still wonder where the idea really originated though....
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Peter Clarke
10/16/2009 4:35 AM EDT
Technomarketeer....Jonah Probell's article on the synergies of a Synopsys-ARM merger was a response to the article you cite.
As to where the idea originated. I first heard it from Didier Scemama of ABN Amro...i guess it will be up to ARM to construct some sort of poison-pill defensive position.
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Jonah Probell
10/21/2009 7:17 PM EDT
garydpdx: If a merger occurred wouldn't MIPS licensees still go to Synopsys for industry leading tools and Cadence users still license ARM's industry leading processors?
TechnoMarketeer: Intel, as a chip maker, is at a different level in the semiconductor food chain from IP and EDA vendors like ARM and Synopsys. Intel never crossed my mind while speculating about ARM and Synopsys. Since you brought it up, can you elaborate on how an ARM-Synopsys merger would undermine confidence in ARM's ecosystem?
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garydpdx
10/24/2009 3:48 PM EDT
Jonah - my concern as a MIPS or PowerPC user would be that a Synopsys solution may be suboptimal versus a design based on ARM (if the two were part of the same firm). An ARM design team would wonder if a Cadence solution might be suboptimal versus using Synopsys.
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Jonah Probell
10/27/2009 1:26 PM EDT
garypdx: I share your concern. By analogy, users of ARM tend to get better results with Artisan cells and users of Artisan tend to get better results with ARM processors. Both are still interoperable with competitors IP but it was to ARM's and Artisan's advantage to merge. I would expect a similar result with Synopsys and ARM.
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