Arm Holdings vs Intel

ARM — Advanced RISC Machines — was founded in November 1990 as a joint venture between Acorn Computers, Apple, and VLSI Technology in a barn in Cambridge, England. Apple needed an energy-efficient processor for its Newton personal digital assistant; Acorn had developed the ARM processor architecture but lacked resources to commercialise it alone; VLSI provided manufacturing expertise. The company began with 12 employees, no revenue, and an architecture that would eventually run inside more devices than any other processor design in history.

ARM adopted a business model unusual in the semiconductor industry: rather than manufacturing chips, ARM licensed its processor architecture to other companies who incorporated it into their own chip designs. ARM earned royalties on every chip sold using its architecture. As the mobile phone market grew from millions to billions of devices, the royalty stream became extraordinary. ARM's design appeared in Nokia phones, Apple iPhones, Samsung Galaxys, and virtually every other smartphone.

ARM went public in April 1998 simultaneously on the London Stock Exchange and NASDAQ. The IPO raised £170 million. ARM's stock rose over 1,000% during the dot-com boom as investors recognised that every mobile device would need an energy-efficient processor — and ARM's architecture was uniquely positioned to provide it. The company had bet on mobile computing before most investors understood what mobile computing would become.

Masayoshi Son's SoftBank acquired ARM in July 2016 for £24.3 billion — at the time the largest ever acquisition of a European technology company. Son described ARM as the "brain" of the internet of things. British politicians worried about a national technology champion passing into foreign ownership. Son promised to double ARM's UK workforce. ARM continued to operate with significant autonomy under SoftBank ownership. Nvidia subsequently attempted to acquire ARM from SoftBank for $40 billion in 2020, but regulators in the United States, United Kingdom, European Union, and China all raised concerns, and the deal collapsed in February 2022.

ARM went public on NASDAQ in September 2023 in the largest technology IPO of the year, valuing the company at approximately $55 billion. Full-year FY2025 revenue (ending March 2025) reached a record $4.007 billion — up 20.6% — with net profit rising 313%, as ARM crossed the $1 billion quarterly revenue milestone for the first time. ARM expected that approximately 50% of all new server chips shipped to top hyperscalers in 2025 would be ARM-based — a dramatic shift from the Intel/AMD dominance of prior decades. Google, Microsoft, and Amazon were all building data center chips using ARM architecture. The barn in Cambridge had become one of the most valuable technology companies in the world — having never manufactured a single chip.

Gordon Moore published a paper in 1965 observing that the number of transistors on a microchip doubled approximately every two years, while the cost halved. He predicted this trend would continue. "Moore's Law" proved to be one of the most reliable predictions in the history of technology, holding for over fifty years. Intel's entire business strategy was built around the predictable improvement curve that Moore had identified: make chips faster and cheaper at a rate that customers could anticipate and plan around.

Robert Noyce and Gordon Moore founded Intel in July 1968, having left Fairchild Semiconductor. Noyce had co-invented the integrated circuit. Their initial investor, Arthur Rock, raised $2.5 million in two days. Andrew Grove, who joined as employee number three, would eventually become Intel's most transformational CEO.

Intel introduced the 4004 in 1971 — the world's first commercially available microprocessor: a complete CPU on a single chip. It had been commissioned by a Japanese calculator company. Intel engineer Ted Hoff proposed putting the entire computing logic on one chip rather than multiple chips. The 4004 contained 2,300 transistors. A modern chip contains tens of billions. The 4004 made the personal computer possible in principle; a decade of further development made it possible in practice.

IBM chose Intel's 8088 processor for the IBM PC in 1981. IBM's open architecture allowed other manufacturers to clone the PC using Intel chips. The "Wintel" ecosystem — Windows operating system on Intel processors — became the dominant computing platform for three decades. Intel's revenues grew from $800 million in 1980 to $33 billion in 2000 as personal computer adoption spread globally.

Intel spent years falling behind in semiconductor manufacturing, failing to advance to smaller transistor sizes at the pace that Taiwan's TSMC and South Korea's Samsung had achieved. Competitors including Apple, AMD, and Qualcomm were having their chips made by TSMC using processes more advanced than Intel's own factories. CEO Pat Gelsinger, who returned to Intel in 2021, announced an ambitious plan to rebuild Intel's manufacturing capability and become a contract chip manufacturer — directly competing with TSMC. The programme required $100 billion in investment. Gelsinger was replaced in December 2024 after the stock fell 60% and the turnaround stalled. Intel remained the processor inside approximately 70% of the world's PCs — but the AI era was running on Nvidia GPUs and TSMC silicon, and Intel was in danger of becoming a passenger in the industry it had created.