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The latest financial filing from UK processor designer ARM is shedding light on its position in China as well as the risks of its product rebranding. This comes as the company saw its first billion dollar quarter and reported revenue of over $4bn earlier this month.
After 20 years, the company is moving on from the Cortex product brand, and is moving into more integrated compute sub-systems, which it has so far called Corstone.
One of the big issues is ARM designing custom chips for customers, with the first one reported to be for Meta, the owner of Facebook. As eeNews Europe has highlighted, ARM acknowledges this could cause problems with existing customers who design their own chips. This is especially important as 56% of the company revenue comes from the top five largest customers.
“We have been, and may in the future be, engaged to advise on or design chips for certain existing customers and other third parties, including affiliates of SoftBank Group, across a variety of use cases and end markets,” it said.
“As with any company entering a new market or offering new products or solutions, we will compete with companies that have a more established presence, longstanding customer relationships and established brand awareness. Because our resources must be allocated amongst developing and maintaining our existing IP portfolio and developing and commercializing any new, more integrated compute products or solutions, companies that focus their efforts on a single product or solution or a limited number of products or solutions may have significantly greater financial, technical, manufacturing, marketing, sales and distribution resources dedicated to such markets and solutions than we do.”
As a result, “customers or partners may terminate or materially reduce their relationship with us and seek alternative architectures or products from competitors. Accordingly, to the extent that we pursue entry into any new market or offer any new product or solution, we may not realize the anticipated financial benefits of such changes in the amounts we may anticipate, on our expected timeline or at all.”
ARM China is the largest customer, accounting for 17% of the business and nearly half of all royalties. This is a key risk with the current US-China trade war and restrictions on the shipment of IP such as the Neoverse V series high performance cores and chiplets for AI datacentre chips. Earlier this month the UK government updated its export controls to match those of the US for high performance computing cores.
This could also impact on the automotive business, where the Neoverse V3 cores (which will become Zena) are gaining traction for autonomous driving.
“Royalty revenue from mobile applications processors constituted approximately 46% of our royalty revenue for the fiscal year ended March 31, 2025. Our concentration of revenue from the PRC market makes us particularly susceptible to economic and political risks affecting the PRC, which could be exacerbated by tensions between the US or the UK and the PRC with respect to trade and national security.”
It also points out that the near-term growth prospects of the PRC semiconductor industry is unclear due to the uncertain effects of trade and national security policies and high levels of debt in both private and state companies.
ARM China is a subsidiary of SoftBank rather than ARM via a company called Acetone, with 35% 35% indirectly owned by HOPU Investment Management and 17% directly and indirectly owned by other Chinese parties. The ARM CEO, Rene Haas, sits on the board as an appointee of Acetone.
This comes as the company is also rebranding its product lines.
ARM is in the process of rebranding many of its products, which its acknowledges may not produce the benefits expected. Initially, the rebranded products will not have the brand recognition as the prior product names and could result in customer confusion. This will see the shelving of the Cortex name that has been used since 2005.
It says it has checked that the rebranding will not infringe on the IP of others, but may unintentionally infringe on IP rights of others and the company may not be able to obtain adequate IP protection.
Under the rebranding, each compute platform will now have a separate identity.
- Neoverse for infrastructure
- Niva for PC
- Lumex for mobile
- Zena for automotive
- Orbis for IoT
Mali will continue as the GPU brand, with IP referenced as components within the platforms.
ARM is also moving to names like Ultra, Premium, Pro, Nano, and Pico to show performance tiers, saying this makes it easier for developers and customers to navigate the roadmap which implies that Cortex and Corstone will no longer be used for future cores and compute subsystems.
“This platform-first approach reflects the rapid conversion taking place to the ARM compute platform at the system level, not just the core IP. It allows our partners to integrate our technology faster, with higher confidence, and with less complexity — especially as they scale to meet the demands of AI,” said Haas.
The company specifically highlights the risks from the European Quintauris RISC-V joint venture which includes ARM customers such as Infineon Technologies, NXP Semiconductors, Nordic Semiconductors and STMicroelectronics. This also includes Qualcomm, which won a bitter court case against ARM late last year and has now filed an antitrust case against the company.
“Our current and potential competitors may also be subject to more favourable regulatory regimes or establish cooperative relationships,” it said. “For example, in August 2023, a group of our customers and other competitors announced a joint venture aimed at accelerating the adoption of RISC-V, initially focused on the automotive sector.
“If our competitors establish cooperative relationships or consolidate with each other or third parties, such as the previously mentioned joint venture focused on RISC-V, they may have additional resources that would allow them to more quickly develop architectures and other technology that directly compete with our products.”
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