In 2004, ARM paid nearly a billion dollars for the physical IP company Artisan. Many people said at the time that ARM had overpaid for a company with revenues of $82m.
Three years on, and revenues have hardly improved, at $86.7 million, despite considerable investment in the PIPD (physical intellectual property division) which is the new name of the Artisan operation.
“We set out on this journey at the beginning of 2005 with 130nm technology”, said Warren East, ARM's CEO, last week, “we had half the 90nm developed; we developed the 65nm; and we developed the 45nm. It’s been very challenging.” And expensive.
The proof of the pudding will be in the eating, and whether top tier licensees of ARM’s processors, the sort of guys who make 45nm ICs, decide to add the physical IP product to the processor product.
East argues that the reasons for doing so are compelling. “One of the reasons why we say it’s better if the processors and physical IP are developed together, is because it makes the whole process quicker, more reliable and so on”, said East, last week.
At the time of the acquisition of Artisan, ARM argued that synergies would make the combined company more powerful than the sum of its parts giving customers a broader offering ‘from architecture to silicon implementation’.
It's logical but, ARM's processors are unique, physical IP is not. Expanding outside one's core activity is tricky in the chip business.
Just ask Intel.
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