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ARM chips to take 10% of PC market by 2013: Morgan Stanley

2011/11/29 13:04:26

Taipei, Nov. 29 (CNA) Desktop PCs and laptops using processors based on ARM Holdings Plc's architecture will account for 10 percent of total PCs by 2013, eroding demand for traditional processors using Intel Corp.'s chipsets, Morgan Stanley said Monday.

The figure, which is higher than the 3.5 percent projected by International Data Corp. (IDC), will represent roughly 39 million PCs, excluding tablet computers, the U.S. investment bank said in a research note.

In a recent survey of 30 PC makers, Morgan Stanley found that 40 percent of the respondents indicated that they were at least willing to try building ARM-based systems over the next two years.

ARM-based chips, made by companies like Nvidia Corp. and Texas Instruments Inc., are known for their lower costs and more efficient power consumption.

The adoption of the new chips in PCs may progress slowly, however, as Microsoft Corp. will not support even limited use of ARM processors until its next Windows system -- Windows 8 -- is released in 2012, Morgan Stanley said.

"We believe PC makers in general still view the transition to ARM with a lot of uncertainty. ... The lack of certainty on consumer acceptance, software compatibility issues, and the readiness of the ARM processors by 2012 are all roadblocks," it said.

Meanwhile, the bank sees Taiwan Semiconductor Manufacturing Co. (TSMC) as the largest beneficiary in the move to ARM processors due to its lead in advanced processes for heat dissipation and power consumption.

"We see the move to quad core processors and 28-nanometer process technology as critical steps to allow the ARM camp to improve in these areas," the bank said.

"We believe most of the ARM processors for PCs will be done at 28-nanometer or even 20-nanometer in the next two years, and since TSMC has a significant lead at 28-nanometer, we would expect TSMC to garner the majority of this business."

If 10 percent of PCs adopt ARM chips in 2013, it would represent an incremental US$658 million (NT$20 billion) in revenues for the foundries, the bank noted.

In terms of individual PC brands and ODMs, Morgan Stanley believed that Acer Inc. and Compal Computer Inc. of Taiwan will likely have to increase research and development investment in ARM-based PCs as their R&D investment is currently relatively low compared with that of their peers.

The two companies will likely face bigger margin pressure than if they are not able to generate demand from these new devices, the bank said.

(By Jeffrey Wu)
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