[Tech Talk] ARM and Intel: Foes or Allies?

Intel "x86 Market Is Still Hot"
ARM "PC Market Share Target Is 50%"
Clash in PC Market...New Opportunities in Contract Manufacturing

Intel and ARM are the two leading companies representing the two major camps in computer central processing units (CPUs). However, despite both companies focusing on CPUs as their main products, they have not directly competed with each other. Intel CPUs have been installed in data centers and PCs, while ARM CPUs have dominated the mobile and Internet of Things (IoT) sectors.

But as ARM CPUs have entered the server and even PC markets, a collision between the two seems inevitable. However, the competitive landscape is somewhat different from before. While Intel is reluctant to allow ARM-based products to enter the market, it is also viewing ARM’s market participation as a new opportunity.

ARM PCs: A Threat or Opportunity for Intel?

Intel CEO Pat Gelsinger participating in Computex Taiwan 2024
[Photo by Intel]

Pat Gelsinger, CEO of Intel, attended Computex 2024 held in Taipei, Taiwan, on the 4th (local time). The main topic at this event was undoubtedly the future of x86 architecture-based CPUs.

Currently, CPU designs are largely divided into two camps: x86, held by Intel and AMD, and ARM’s ARM v9.2 architecture. Especially, the latest ARM-based designs have stood out in data centers and artificial intelligence (AI) semiconductor fields. ARM is now targeting the PC market. Moreover, Microsoft Windows OS, a core part of the PC ecosystem, has also decided to support ARM.

CEO Gelsinger dismissed some concerns by saying, "This is not the first ARM Windows announcement, and the x86 market is very hot." The PC market share of x86 is about 90%, with Intel’s dominant position remaining solid. Intel’s latest generation PC CPU, 'Lunar Lake,' is highly rated for both performance and efficiency.

However, CEO Gelsinger is also considering the possibility of Intel losing market share. He said, "If ARM enters (the PC market), we want to handle the foundry." ARM designs chips but does not manufacture them directly. Intel wants to produce ARM-designed chips in its factories. Gelsinger emphasized, "This is sincere," adding, "The partnership between Intel and ARM will be more beneficial to both companies than anyone imagines."

Intel Foundry Services Eyeing ARM Contract Manufacturing

US President Joe Biden Visits Intel Factory in Arizona
Photo by Yonhap News

In fact, cooperation between Intel and ARM is underway behind the scenes. In February, Intel agreed to contract manufacture ARM-based semiconductors for supercomputers at its 18A (18 angstrom, 1.8nm class) production line. Among ARM’s automotive semiconductor partners, Intel Foundry was one of the first companies to participate.

Currently, Intel Foundry Services (IFS) boasts the world’s second-largest revenue scale after Taiwan’s TSMC. However, most of IFS’s revenue comes from internal corporate sales. In other words, IFS earns money by contract manufacturing CPU designs sold by Intel headquarters. For IFS to become a truly large independent foundry company, it must secure external orders.

This creates a "small channel" where Intel and ARM can seek cooperation. If ARM PCs really take away market share from x86, Intel as a semiconductor vendor will be hit. Instead, if IFS secures the contract manufacturing volume of ARM PCs, Intel’s ongoing structural reform from an integrated semiconductor company to a foundry company will gain momentum. It might even compensate for Intel’s data center business, which is gradually losing steam.

"We Will Achieve 50% PC Market Share" - ARM’s Bold Declaration

Ren? Haas, ARM CEO, also participated in Computex 2024 as a keynote speaker. [Image source=ARM]

So, how likely is it that ARM-based PCs will actually succeed? As CEO Gelsinger revealed at Computex, ARM-based semiconductors currently occupy only about 10% of the PC market. The situation is similar in data centers. However, it should not be forgotten that when ARM first announced its entry into data centers in 2018, no one expected ARM to thrive in the high-performance logic semiconductor market.

Moreover, ARM has secured major corporations as customers. The three major cloud providers?Amazon AWS, Google, and Microsoft?all now create their own CPUs using ARM’s intellectual property (IP) and design services. NVIDIA’s supercomputer chips, 'Grace' and the next-generation 'Vera' CPUs, are all built on ARM cores.

Therefore, it is not unreasonable for ARM to have a positive outlook on the future. In fact, ARM’s new CEO, Rene Haas, also participated in Computex 2024 where CEO Gelsinger spoke. Haas emphasized, "In the AI era, ARM is the inevitable choice," adding, "AWS Graviton, Microsoft Cobalt, and Google chips made with ARM designs have all achieved energy savings of 40-60%."

He also made a bold declaration: "By the end of next year, we expect more than 100 billion ARM-based AI devices worldwide," and set a goal to achieve 50% market share in the Windows PC market within five years. If Haas’s words come true, it means Intel and AMD’s market will be halved within the next five years. Whether by unveiling new weapons against competitors or restructuring their business models to adapt to the changing market, both Intel and AMD will need to prepare countermeasures.