( ESNUG 562 Item 1 ) -------------------------------------------- [06/30/16]
Subject: 64% of EDA/IP vendors see SoftBank/ARM buyout as a long term GOOD
MOST EDA/IP RIVALS VERY HAPPY: I want to thank the 47 EDA and IP vendors
who answered this quickie survey on the SoftBank/ARM buyout.
Here's the results:
SURVEY QUESTION
The Wall Street Journal just confirmed that Japan's SoftBank is
acquiring ARM Holdings for ~32 billion U.S. dollars in cash.
AS A CHIP DESIGNER or CHIP VERIFIER, how do you think this will
impact your company's chip designs?
SHORT TERM (Choose one) is this GOOD, or BAD, or NEUTRAL news?
GOOD: ################## 36%
BAD: #### 7%
NEUTRAL: ############################# 57%
LONG TERM (Choose one) is this GOOD, or BAD, or NEUTRAL news?
GOOD: ################################ 64%
BAD: ####### 14%
NEUTRAL: ########## 21%
It's interesting that 36% saw this as an immediate GOOD. It was also very
interesting that 64% of ARM's EDA and IP rivals also saw SoftBank/ARM as a
long term GOOD -- in direct contrast to the 68% of chip designers who saw
this merger as a long term BAD!
Reading the comments below, it becomes very clear as to why the rivals and
EDA vendors love this SoftBank/ARM merger -- it's an opportunity for them
to take some of ARM's marketshare away. "Let's steal ARM's sales!!!"
And although a few ARMH employees replied, I excluded their input from these
survey results.
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Short term: Good, bad, or neutral?
Depends who you are asking about.
For IP vendors it is AWESOME.
MIPs, ARC, Andes, Cortus, Codasip ... a great event for these folks.
And especially for RISC-V ... they must be thanking ARM endlessly
for launching them into the stratosphere!!! SiFive has to be
celebrating.
For ARM customers it is HORRIBLE. Expect HUGE price increases; and,
the Japanese will give their own companies a huge pricing advantage.
I'm guessing Huawei must be super super pissed. Asians don't like
nor trust the Japanese. Look for the major Asian ARM customers to
leave the fold - congrats Andes, Cortus, Codasip, MIPs, ARC!!!!
For the UK it's HORRIBLE news right after Brexit. See David Manners'
blog where he says "This is a tragedy".
For ARM this is HORRIBLE. A childhood friend sent me this note when
he read the news:
"Softbank bought Sprint. My sister was a 22 year veteran at
Sprint and quit because she just couldn't stand it anymore.
ARM employees will start leaving in droves."
Can you imagine the change in corporate culture about to take place?
Americans especially have trouble dealing with Japanese strict
structure and etiquette ...
I can imagine ARM Austin will be deserted soon. Is it a coincidence
that Samsung announced in parallel a new office in Austin with 100's
of new great R&D engineering jobs??? Hmmmmmmm.
Long term? Great for RISC-V. Awesome for ARM competitors. Terrible
for ARM and its customers. Same reasoning. My $.02
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We compete directly against ARMH.
SHORT TERM: GOOD FOR OUR OWN COMPETING IP
Fundamentally this deal affirms opinions we hold.
We agree with SoftBank that the IP business model is a good one
and the premium on ARM's share price was fair (we've seen a
uptick in ours, too, as people focus on the positives of IP).
It shows the value behind fundamental technology building
blocks like CPUs and GPUs). It validates the expectation that
there is a long way for our market to grow as more and more
'things' become networked.
LONG TERM: GOOD FOR OUR OWN COMPETING IP
IP licensing works in large part because of the independence
of the players and it's not clear to what extent this will be
retained for ARM, despite their positive rhetoric. We remain
an independent IP source and we are unsurprised that a number
of analysts have seen this deal as a potential positive for us
once ARM is in SoftBank ownership.
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SHORT TERM GOOD
This will help accelerate ARM's entry in the datacenter but it
will be interesting to see how it turns out commercially since
in the past ARM shared the revenue with their licensee partners.
This new SoftBank/ARM entity will probably not be willing or
able to share with their semiconductor partners as easily. I
expect to see SoftBank/ARM develop business relationships with
system/box manufacturers.
LONG TERM GOOD
This probably enables SoftBank/ARM become the #2 supplier into
the datacenter space with a firm grip on the smartphone market.
OpenPOWER and RISC-V will have uphill battles to win datacenter
sockets.
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We do system design automation.
Short Term : Good
Long Term : Excellent
What Softbank has done for the CHIP eco-system is transformative.
To understand why - one needs to look at the most recent Softbank
investments - they are all in the broad area of online market places
and online aggregators of real world services. With this investment,
Softbank has brought back a huge focus on investing in core
technologies such as chips, design platforms and systems.
Softbank has very likely triggered the first global investment rush
for system design automation platforms. Which we sell, so it's
good for us!
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We're a small IP and Services company in the U.S. focusing on the
IoT and M2M market by selling IP subsystems. We've been doing ARM
based designs (low end) for 16+ years. Here are my answers:
SHORT TERM: Neutral. I think in the short term it will be business
as usual. I think the momentum for ARM is so large and so many new
products, especially in the IoT space are presently being designed
that not much will change.
LONG TERM: Good. It all depends on support for the ARM eco-system
in my humble opinion. You might see disruption if ARM managers
get re-assigned or jump ship or take their stock and go home. This
would be BAD. However, if ARM and SoftBank can boost the ARM
Partners with more support both in marketing and easy to use design
packages, then the long term affects for SoC Solutions will be GOOD.
If ARM/SoftBank only focus on the mobile market and Tier 1 customers,
then the effect for my company will be BAD.
I'm optimistic that ARM/SoftBank will not ignore the IoT market and
things will be GOOD...
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SHORT TERM: NEUTRAL
LONG TERM: BAD
Having seen the effect first hand of an outside investor giving the
existing good bosses a new boss over them, it's BAD. ARM is a very
well-run company. Having a new Japanese owner over them, pushing
them to get higher returns will not be good for ARM.
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I am neutral on both. Have no idea who or what SoftBank is... why is
a bank acquiring a semiconductor IP company?
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SHORT TERM: NEUTRAL
LONG TERM: GOOD
I am a rep and selling IP for two providers.
I heard that a lot of Chinese OEMs who are using ARM uPs who owns a
great majority of the processor IP market may not be that happy
with ARM being owned by a Japanese company.
That will benefit Imagination Tech, Synopsys, Mentor, etc...
Also valuation of IP companies may increase due to the fact that
ARM got 30x of their anual sales???
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SHORT TERM: NEUTRAL
LONG TERM: GOOD
Short term I see nothing changing drastically for ARM or SoftBank or
for the semiconductor industry.
Long term I think this could be actually "transformational" -- I see
the roots for a new business model taking shape. One that extends
beyond the current ARM licensing model and includes software and
end-users as part of the larger ecosystem where value will be created.
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I can see the point of view of both companies wanting to capitalize on
IoT, and theoretically Softbank can inject some good $$$ into ARM to
do that, but what does this mean for ARM's other target markets beyond
IoT and mobile?
Also Softbank didn't do well with the Sprint acquisition and it's
carrying a lot of debt. According to Reuters, CEO Masayoshi Son says:
"Yoda says in Star Wars 'Listen to the force'. If you listen
to the force, this is the best company to invest in the debt,"...
I can't wait to hear what people think.
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SHORT TERM: NEUTRAL
LONG TERM: GOOD
It is a massive bet on the future of IoT, and SoftBank is acquiring
the pearl before anyone else even begins to take this market seriously.
SoftBank will need additional IP to fill out the portfolio - so expect
more announcements. And the real cost and return is in the systems
and databases that aggregate the IoT data into a useful system. Owning
the silicon is not enough.
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Short term: Bad because ARM now in competition with their customers
Long Term: Very Bad because ARM prices will go high and they'll still
be in competition with their customers.
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Neutral on both. No semiconductor company could buy it as it messes
up their customers by competing with them.
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AND CLOSING WITH THE BRITISH EDA/IP VENDOR COMMENTS...
NEUTRAL
GOOD
Since BREXIT, a Japanese company is more stable for IP vendor.
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As an IP/EDA vendor the SHORT TERM is BAD as (along with other recent
events in the UK) it creates uncertainly, perhaps leading to delays
in decision making at our customers (no names no pack-drill!)
LONG TERM NEUTRAL. I suspect it will be "business as usual" in the
long run.
For the UK "industrial strategy" its two-way: investors might be
encouraged that there are buyers out there for a UK kind of tech
company -- i.e. its not all just about Apps and software.
On the other hand the UK is loosing control of a star player. Longer
term we will no longer be able to say "look at this great UK tech
company: this is what we are about".
Maybe we will just have to fill those empty shoes. ;-)
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SHORT TERM GOOD - particularly after Brexit. Softbank are stating
that they will grow the company in the UK by 50% over the coming
years. This size of investment now ($32B) and going forward sends
a positive vibe out to those who may be having second thoughts on
investing in the UK post-Brexit.
LONG TERM NEUTRAL - as whilst this shows a great investment in a
post-Brexit Britain, it is also a shame that a global fundamental
chip architecture leader will now be Japanese and not British;
although how it is actually perceived as we go forward remains
to be seen.
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Related Articles:
68% of chip designers see SoftBank/ARM buyout as a long term BAD
64% of EDA/IP vendors see SoftBank/ARM buyout as a long term GOOD
Simon Segars' private memo to the ARM APM partners about SoftBank
ARM/SNPS/MENT rock IP survey while CDNS has embarrassing 2nd year
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