Published in Processors

ARM under pressure after customers merge

by on21 September 2015


Atmel and Dialog could be bad news


Chip designer Arm is under pressure after two of its customers decided to combine their businesses. Anglo-German Dialog Semiconductor wrote a cheque to buy US rival Atmel for $4.6bn.

Analysts at Liberum claim the news could hit the UK company's outlook. Dialog has agreed to acquire US listed Atmel. Both are Arm licensees.

There has been a wave of consolidation in the semiconductor space this year. Arm has seen lots of its leading licensees merging including Qualcomm/CSR, NXP/Freescale, Intel/Altera, Intel/Spreadtrum, Avago/Broadcom, Dialog/Atmel.

rm's licensing opportunity drops as as only one licensee fee will be required from the combined entities.

Licensing is 41 per cent of Arm's revenue and often overlooked versus royalty. Arm needs a very strong licensing performance in the fourth quarter which could be a risk given this customer consolidation.

Arm's share price is also being propped up by the fact that it is a major supplier to Apple. However signs are that things are not going that well for Jobs' Mob either.  If things do go pear-shaped for Apple then Arm will be gutted.

 

Last modified on 21 September 2015
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