Arm Holdings stock has experienced a significant two-day rally, surging by 8.5%. This surge in stock price is fueled by speculation surrounding the potential benefits that the newly public chip design company could reap from an expansion in the production of microprocessors for Microsoft Windows-based personal computers utilizing Arm technology.
Currently, Qualcomm (ticker: QCOM) is the sole chip maker licensed by Microsoft (MSFT) to manufacture Arm-based processors for Windows PCs. However, this exclusive arrangement is set to expire next year. In light of this, recent reports from Reuters have indicated that both Nvidia (NVDA) and Advanced Micro Devices (AMD) are in the process of developing their own Arm-based processors for Windows PCs. If these reports hold true, these companies could potentially start shipping their products as early as 2025. It is important to highlight that Intel (INTC) and AMD (AMD) currently dominate the PC processor market with their x86-based designs.
Notably, both Nvidia and AMD have refrained from providing any official comments regarding these reports. The information shared by Reuters was attributed to two individuals who are familiar with the matter.
It is worth highlighting that Nvidia secured a 20-year licensing agreement with Arm, which remains intact even after Nvidia’s proposed acquisition of Arm was terminated in 2022. Similarly, AMD has been a longtime licensee of Arm; however, neither company has ventured into producing Arm-based PC chips thus far.
In a research report, NewStreet Research analyst Pierre Ferragu expressed his belief that Arm (ARM) will face significant challenges in gaining traction in the PC market.
Nvidia’s Interest in Arm-based PC Processors Gains Attention
Recent reports of Nvidia’s interest in producing Arm-based PC processors have raised eyebrows in the tech industry. While Apple has been the sole frontrunner in this domain, industry experts believe that Nvidia’s potential move should not be underestimated.
One prominent analyst emphasized the significant advantages of a closer integration between GPU and CPU, particularly for gaming enthusiasts and professionals involved in 3D graphic design. This integration offers a powerful value proposition that can enhance the overall performance of laptops.
Notably, this development has caught the attention of both Intel and AMD. Analysts predict that if Nvidia enters the CPU market, it could present a substantial challenge to these two tech giants.
According to research conducted by Mercury Research, the demand for Arm-based PCs, including Macs, has steadily increased over the years, accounting for 12% of the market as of June 30. This figure marks a significant rise compared to 9% the previous year and a mere 2% just two years ago. As PC manufacturers increasingly prioritize AI computing capabilities, it makes sense for Nvidia and AMD to set their sights on Arm-based chips.
While analysts acknowledge the potential threat posed by Nvidia and AMD’s entry into the Arm-based PC chip market, they also emphasize that Intel’s success will largely hinge on the progress made in building out its foundry business.
Overall, the tech industry eagerly awaits the development of this new frontier in PC processors. Nvidia’s interest demonstrates a growing recognition of the value and potential in Arm-based systems, as well as the impact it may have on established players like Intel and AMD.