ARM is to buy chip component manufacturer Artisan.
ARM, the UK-based Risc chip designer, stands to broaden its IP offering significantly with the proposed acquisition. Artisan offers physical IP components for the design and manufacture of system-on-chip (SoC) integrated circuits.
The company says the merger will enable it to deliver one of the industry’s broadest portfolios of SoC IP. It believes the deal will enable the combined company to take advantage of growth opportunities as system design complexity increases in the sub-micron age.
California-based Artisan has a broad product portfolio, including standard cell libraries, embedded memories, input/output cells, analog functions and high-speed interface IP.
The company, which claims a 2,000-strong customer base, has a record of profitable growth, as evidenced by the fact that its net income more than tripled to in the year to September 30. Artisan also offers ARM a low cost R&D base with a center in Bangalore, India, that employs 40 of the company’s 340-strong workforce.
Yet there are clearly risks to the deal. It could upset ARM customers who use Artisan’s competitors such as Virage Logic and Rambus, since over time, ARM’s processors and Artisan’s components will be optimized to work together. The two companies also have different business models: while ARM’s customers pay an up front license fee and then a royalty on each device, Artisan gives away its components but then collects a 2.5% royalty on the value of each wafer from approved foundries.
ARM is perhaps unsurprisingly facing criticism that it has been panicked into enhancing its own growth prospects by overpaying for Artisan, and this can only be answered by its performance over the next year.
