ARM Holdings Plc (NASDAQ: ARMH) business may suffer if Android Tablets fail to takeoff, according to a mixed data that Global Equities Research LLC got from various Silicon Valley event
Apple has licensed physical intellectual property (IP) from ARM and not an architectural license. On relative basis, physical IP license provides less revenue to ARMH versus architectural license.
Converged view is that Apple will move completely away from ARM instruction set over the next 2 years, and Apple will have its own optimized instruction Set, Global Equities pointed out. This will lead to decreased licensing payments from Apple.
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Data also points that end user device pricing is under serious pressure, and device manufactures are pushing ARMH to reduce its licensing fees, the brokerage said.
ARMH business is benefiting from many experimental projects, however, if the companies decide to cancel these projects for economic or market reasons, ARMH business could get hurt, according to the converged view.
ARM designs microprocessors, physical IP and related technology and software, and sells development tools.
On the positive front, Altera (NASDAQ:ALTR) and/or Xilinx (NASDAQ:XLNX) may signup for ARM architectural license, which has the highest price points and has the maximum revenue potential, Global Equities' data showed. The following companies are already signed up for ARMH architectural license – Qualcomm (NASDAQ:QCOM), Broadcom Corp. (NASDAQ:BRCM), Samsung, Marvell Technology (NASDAQ:MRVL), Freescale Semiconductor (NYSE: FSL) and Microsoft (NASDAQ:MSFT).
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Amazon.com is creating a GPU (Graphical Processing Unit) based compute farm, which may also be powered by ARMH chips, Global Equities pointed out.
Overall, negatives may outweigh the positives for ARM based on the mixed data, the brokerage said.