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Arm CEO Simon Segars On The Chip Crisis, A New Computing Era And Nvidia's $54 Billion Bid For His Company
www.forbes.com, Oct. 04, 2021 –
On a sideboard in his office in San Jose, California, Simon Segars, the CEO of Arm, has a 1980s-era Motorola DynaTAC mobile phone on display that's the size of a small brick. Segars, who became the company's top executive in 2013 and lives near its U.S. headquarters, picks up the device, which he bought on eBay, and slips off the battery pack to show a visiting reporter line after line of text printed on the back of the phone's body. They're basic instructions for how to use it.
Over the past few decades, mobile phones have gone from brick to slick, packing huge amounts of computing power into slim packages of brushed metal with touch-sensitive screens. Arm, which was founded in 1990 in a converted barn just outside of Cambridge in the U.K. and still has its global headquarters in the city, may not be a household name, but it's played a pivotal role in this transition. Its 7,000-plus employees dream up the super energy-efficient processors that are the silicon brains of most of the world's smartphones and which are also found in everything from autonomous vehicles to cloud-computing servers and supercomputers.
Arm doesn't make chips; instead, it licenses its designs and software development tools to other companies who use them to build and manufacture microprocessors–a business that generated almost $2 billion in revenue in its latest full fiscal year. Over 100 billion Arm-based chips have been shipped by manufacturers in the past five years. The company's success has attracted some notable suitors: In 2013 Japan's SoftBank paid $32 billion for Arm and in September 2020 U.S. chip giant Nvidia launched a cash-plus-shares bid for it that's currently worth $54 billion. The proposed transaction, which has SoftBank's backing, is being reviewed by regulators in the U.S., U.K., China and the European Union.
Ripple effects
Arm's relationships with its 580 licensees around the world, who include chip giants such as Qualcomm, Samsung and Marvell, plus Segars' role as chair of the Global Semiconductor Alliance, an industry group with some 250 corporate members, give the 53-year-old executive a unique perspective on the chip supply crisis that's causing chaos in industry after industry.
Segars believes there aren't any quick fixes. "I think it will take a few years for all of the ripples to work their way through," he says. That suggests a period of prolonged pain for the auto industry, which has been hardest hit by the shortage. Manufacturers such as General Motors, Toyota and Ford have cut back production and, in some cases, idled factories as they struggle to get enough chips for vehicles. Consulting firm Alix Partners estimates that the silicon supply squeeze could cost the auto industry $210 billion in lost sales this year.
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