In this photo illustration the Arm Holdings logo seen on a smartphone with purse … [+]
Apple
AAPL
Apple executives announced in October that new computers would get updated processors. The only problem is that these chips are already second-rate compared to a Qualcomm (QCOM) offering.
Investors should continue accumulating shares of Arm Holdings (ARM). Let me explain.
It’s rare for investors to get a glimpse of the industry’s full roadmap. This process is happening now, in plain sight. Computers are migrating from the X86 architecture developed and dominated by Intel (INTC) to a much more energy-efficient framework designed by Arm Holdings.
The writing was on the three years ago a few years ago when Apple CEO Tim Cook shocked the industry with the first Macbooks using M1. The proprietary chip was developed to move the Cupertino, California-based company away from Intel chips. M1 was a rocket, with lightning-fast processing power and the credentials to back it up. M1 did everything better than its old Intel predecessor and ran on Arm Holdings intellectual property, the same technology that powers iPhones.
Apple is now on generation 3 of the M-series chips. Monday’s presentation revealed three new M3 iterations. The fastest chip, the M3 Max, has a 16-core CPU and up to 40 cores dedicated to the GPU. This is a combination of 15% faster than the M2, while still achieving up to 22 hours of battery life. M3 is a great new chip. Unfortunately for Apple, the success was overshadowed by Qualcomm.
THE Snapdragon X Elite is based on the Oryon processor, with 12 processor cores peaking at 4.3 GHz. Like M3, the chip uses Arm IP, making it ultra power efficient.
Qualcomm invited journalists last week to a special processor benchmarking session. The company had 20 Oryon-powered laptops simultaneously running popular benchmarking software such as Geekbench 6, Cinebench 24, PC Mark 10, Procyon AI, and 3Dmark WildLife Extreme. The results were embargoed until October 30, coinciding with the Apple M3 event. The planned comparison went as expected. X Elite tempered on Apple, according to an account of WindowsCentral journalist.
The Snapdragon
To be honest, this isn’t an apples-to-apples comparison.
Qualcomm chips will never work in Macbooks. They were designed to power next-generation devices running Microsoft (MSFT) Windows, the world’s most popular personal computer operating system. And that’s what changes the situation.
According to a business blog In October, Qualcomm signed a contract with nine Windows PC makers to build new machines based on the X Elite platform. Acer, ASUS, Dell Technology (DELL), Hewlett Packard, HONOR, Lenovo, Microsoft Surface, Samsung and Xiaomi. These industry titans are expected to begin rolling out laptops in 2024 powered by the X Elite chip, a development that resets the industry.
Windows machines should finally be able to compete with the new Macbooks in terms of performance and battery life. The inevitable transition to Arm-based processors also empowers PC makers, at the expense of chip suppliers Intel and Advanced Micro Devices.
AMD
The new X Elite platform will only have one SKU. A single SKU allows PC makers to custom configure the chips, similar to how Apple configures M3 across three use cases. Intel and AMD often force companies like Dell to purchase multiple SKUs, like the Core i3 or HX series. This complicates the supply chain and ultimately provides less flexibility for PC manufacturers.
Intel executives say they are not worried about the move to Arm. They say they will be happy to outsource the manufacturing of Arm-based chips in their factories for third parties. AMD does not have such manufacturing facilities.
Arm is the big winner though. The British chip architecture designer effectively won mobile computing in 2007 when Apple chose its energy-efficient IP for iPhone. Partnerships with Qualcomm and Samsung followed. The roadmap to conquering the rest of IT is now laid out for all to see.
Priced at $49.48, Arm shares value the company at $50.8 billion. Nvidia proposed in 2020 to buy the entire company for $40 billion. Arm’s position in the industry is now much more influential, especially given the transition to PCs.
Investors should accumulate stocks for the longer term.
Discover the secrets of a successful investment with our Strategic Advantage Newsletter. Try it now for just $1!
