4 Things Many Investors Might Not Know About Arm Holdings — Including Certain Nvidia and Apple Ties – The Motley Fool
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Last month, Arm stock soared 48% after the newly public company released its quarterly report. Learn more about the world's leading chip designer here.
Last month, Arm Holdings (ARM 1.58%) stock rocketed 48% on the day following the chip designer’s release of a strong report for its third quarter of fiscal 2024, which ended on Dec. 31, 2023. Management cited artificial intelligence (AI) as a main growth driver.
No doubt, the mention of AI and the stock’s huge price movement brought more investor attention to the U.K.-based company, which seemed to have previously been flying under the radar of many individual investors. That’s likely due in part to Arm being new to the public markets — it held its initial public offering (IPO) last September. So even many investors who closely follow the semiconductor market are probably not nearly as familiar with Arm as they are with other big chip companies.
Below are four things you might not know about Arm Holdings, whose primary business is licensing its intellectual property (IP) related to the design of central processing unit (CPU) chips.
Image source: Getty Images.
Arm was founded in 1990 as Advanced RISC Machines, which was a joint venture between the now defunct Acorn Computers, Apple, and VLSI Technology (some parts of which are now part of NXP Semiconductors).
RISC stands for “reduced instruction set computer,” which Arm defines as a “type of microprocessor architecture that utilizes a small, highly optimized set of instructions rather than the highly specialized set of instructions typically found in other architectures.” The company touts that RISC is “often considered the most efficient CPU architecture technology available today.”
Arm’s energy-efficient CPU architecture is widely considered one of the key drivers of the smartphone revolution, as these mobile devices need processors that don’t consume a lot of power.
While Apple’s first iPhone, launched in 2007, wasn’t the world’s first smartphone — or cellphone that had internet access — it played a huge part in kicking off the smartphone revolution. This phone had an Arm-based processor.
Currently, more than 99% of smartphones use Arm-based processors, according to the company.
Arm’s board of directors includes Tony Fadell. He led the team at Apple “that created the first 18 generations of the iPod and the first three generations of the iPhone,” according to his profile on Arm’s website. Beyond leading this group, Fadell is widely credited as inventing the iPod music player.
Moreover, he is a founder and former CEO of Nest, the maker of smart-home gadgets, which Alphabet — whose corporate name was then Google — acquired in 2014.
The answer is “yes” if you’re wondering if at least the first and early iPods had Arm-based processors. And according to various sources detailing teardowns of Nest thermostats, they also use Arm’s tech. Indeed, Arm’s tech is ubiquitous in smart gadgets from TVs to watches.
Fadell’s background is a great fit for Arm’s board, which also includes others with very relevant experience, including former executives at major semiconductor companies Nvidia, Intel, and Qualcomm. And in Qualcomm’s case, it’s a former CEO, Paul Jacobs.
Investors who have been following Nvidia for some time probably know that the leading artificial intelligence (AI) chipmaker tried to acquire Arm, but abandoned the pending deal in early 2022 after running into significant regulatory hurdles.
However, it’s not likely many investors are aware that Arm CEO Rene Haas spent seven years at Nvidia as vice president and general manager of its computing products business before joining Arm in 2013. Haas was elevated to Arm’s CEO position in 2022 following the failed Nvidia deal.
While Arm’s global headquarters is in Cambridge, England, Haas is based out of the company’s U.S. headquarters in Silicon Valley. This makes good sense since the bulk of the world’s largest tech companies are in this region.
The fact that Nvidia was interested in buying Arm makes Arm stock worth at least watching. Nvidia CEO Jensen Huang is as brainy and business shrewd as they come.
Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Apple, Nvidia, and Qualcomm. The Motley Fool recommends Intel and NXP Semiconductors and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.
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