UK chip giant ARM developing GPU in Israel

UK chip giant ARM is developing a graphics processor unit (GPU) in Israel that will compete with Nvidia and Intel, sources familiar with the matter have told "Globes." ARM is estimated to be employing about 100 chip and software development engineers, in its global graphics processing group at its development center in Ra'anana. At this stage, ARM is reportedly engaged in graphic processing for the video game market, and at the same time - as was the case with with Nvidia - the technology could also be used for AI processing, if and when ARM decides to fully enter the field.

The "Switzerland" of the industry

ARM operates differently from other chip companies in that it does not develop its own processors or manufacture them, but develops its own intellectual property or chip development software, which is sold to chip companies that adapt them to their needs and integrate them into their unique technology. In this way ARM has become the "Switzerland" of the chip industry - it provides software for all but does not compete with them - although this may soon change. The company’s customers include Qualcomm, whose chips are embedded in all Samsung devices, Taiwan’s MediaTek (MTK) and Apple. Nvidia also uses ARM technology, although not in the field of GPUs..

As far as is known, ARM’s technology in the field of games is found in processors for mobile phones and tablets, including those manufactured by Qualcomm. Game companies including King, Riot Games, War-Gaming and China’s Tencent collaborate with ARM to improve the performance of games on the chips manufactured using its technology.

ARM’s hardware teams in Ra'anana oversee the development of many components of these GPUs, including the flagship Immortalis GPU, while the Israeli software teams develop software interfaces for external graphics engines developers including Vulkan and OpenGL, for game developers in large companies and startups. ARM’s Israeli office also deals with software development and development tools, cybersecurity components to protect chip activity, as well as sales and service teams for Israeli chip companies that work with ARM.

ARM’s teams in Israel work with startups like Hailo, which has developed an AI chip installed mainly in security cameras. Sources say that the development center assisted Hailo, shortly after its inception, to conduct programming tests, which ultimately helped it to raise $16 million in early-stage financing. Another Israeli company that collaborates with ARM is serial entrepreneur Moshe Tanach’s NeuReality. The company, together with ARM and AMD, has developed hardware that eliminates the use of Nvidia's expensive servers, which can cost up to $500,000, and saves on electricity. NeuReality's 7 nm chip uses ARM’s Neoverse technology and is designed for complex AI processing operations at data centers and with end devices.

The rival from the University of Berkeley

ARM’s Israel development center is managed by Director, ARM GPU HW Engineering and Israel Site Manager at Dedi Yellin. He joined ARM in 2015 when the UK company acquired Israel startup Sansa Security (formerly Discretix Technologies) for $80 million. Yellin initially served at the Israeli company as director of hardware development. Sansa Security developed data security components for mobile phones.

ARM, which is owned by Softbank, was one of last year’s most successful tech IPOs on Wall Street, when it was floated at a valuation of $51 billion in September 2023. It is currently trading at a market cap of $123 billion and in 2024 the stock has risen almost 70%. Until last month the share price was up 170% in 2024, but in mid-July the share price slumped by about a third of its value due to lower-than-expected sales forecasts.

Earlier this month, ARM reported a 39% increase in second quarter revenue amounting to $939 million compared with the corresponding quarter last year. According to its guidance, revenue in the third quarter of 2024 is expected to be $780-830 million. ARM faces competition from open-source enterprise Risk-5, which was founded at the University of California, Berkeley and allows the developer community to design chip technology, which companies can use free of charge.

However, ARM has several possible growth directions, sources say. The company is believed to have plans to launch AI processors for its own servers to compete with Nvidia's and there have also been reports that together with MTK and Nvidia, ARM plans to launch AI processors for personal computers that will compete with those of Intel and AMD. In addition, ARM serves the tech giants, including Apple, Google and Amazon, in their efforts to develop AI processors and servers to avoid dependence on Nvidia and Intel.

ARM has 7,300 employees in development centers in Cambridge, England as well as at centers in the US, Taiwan and Israel.

ARM told "Globes" it does not comment on rumor and speculation.

Published by Globes, Israel business news - en.globes.co.il - on August 14, 2024.