IMAGE: ARM microchip (Raimond Spekking / CC BY-SA)

What is a microchip worth?

Enrique Dans
Enrique Dans

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Intel has announced a delay of more than a year in its 7nm chip manufacturing process, which gives an idea of the reasons why Apple recently announced it was abandoning the US company’s chips and would make its own and use ARM architecture instead.

Intel’s problems are not new: this is not the first time the company has announced delays. This time, however, is more serious, considering the importance of the 7nm manufacturing process and that competitors such as AMD have been offering the market the same chips, which consistently improve on the performance of Intel’s, leading to a sharp drop in share value. For Apple, Intel had clearly become a bad bet, and going for other types of architecture over which, in addition, it could have higher levels of control made complete sense.

However, the microchip market is is a complex one right now: Japanese conglomerate Softbank, which acquired ARM in July 2016 for $32 billion, says that in the midst of a strong disinvestment to try to amortize the enormous losses of its technology investment fund it intends to look for a buyer for the microprocessor architecture design company.

Who would be interested in acquiring ARM, a company that in 2016 had a turnover of around $1.5 billion in licensing its designs and technology to device manufacturers, who pay a small amount for each unit sold? Softbank paid 21 times

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Enrique Dans
Enrique Dans

Professor of Innovation at IE Business School and blogger (in English here and in Spanish at enriquedans.com)