In a significant shift from their previous reliance on Arm, Qualcomm (NASDAQ:QCOM) and Google (NASDAQ:GOOGL) announced on Tuesday their plan to transition to the open-source RISC-V architecture for their forthcoming wearable devices. The companies are collaborating on the Snapdragon Wear platform that will utilize the RISC-V instruction set architecture (ISA) for next-generation Wear OS products.
Qualcomm, a major customer of Arm that paid over $2.7 billion in royalties in 2021 and used Arm's IP to design its Snapdragon chips, has now invested in a new company to advance RISC-V hardware development. This move comes after a lawsuit by Arm against Qualcomm over Nuvia's design earlier this year.
Google, which uses Arm's IP in its custom Tensor chip in Pixel smartphones and data centers, has also shown a clear intent towards RISC-V. It was demonstrated by the release of an early Android OS that supports it. An Android Authority survey revealed that about half of the respondents would consider a RISC-V phone if it matches the performance of current devices.
The joint venture includes Qualcomm creating custom RISC-V-based solutions that will serve the entire Google Wear OS ecosystem. Qualcomm is tasked with developing RISC-V-based hardware for wearable technology, while Google oversees software development for these devices. The initial focus is on smartwatches, with the potential for more advanced technology down the line.
Bjorn Kilburn from Google and Dino Bekis from Qualcomm have both expressed enthusiasm about this project. By switching to RISC-V cores, there's potential to significantly reduce or even eliminate licensing fees to Arm. It's not clear whether Qualcomm's Snapdragon Wear platform featuring RISC-V ISA will replace all Arm cores or only select ones.
InvestingPro data shows that Qualcomm has a market cap of 124.3B USD and operates with a P/E ratio of 14.27, indicating a relatively low valuation compared to earnings. The company has also managed to maintain a positive return on assets of 17.94%, highlighting its efficiency in using its assets to generate earnings. According to InvestingPro Tips, Qualcomm has a strong track record of raising its dividend for 21 consecutive years, making it an attractive option for income-focused investors.
Companies like Tenstorrent, RISC-V, Ventana Microsystems, Andes Technologies, and Esperanto Technologies are shaping the RISC-V CPU landscape to challenge Arm with a more flexible, lower-cost, and open platform. Both Qualcomm and Google have joined the RISC-V Software Ecosystem (RISE).
Despite Arm's significant performance edge and billions of Arm-powered devices worldwide, the growing interest in RISC-V suggests its potential as a viable alternative for SoC designers. Qualcomm's decision to apply the Snapdragon brand to the RISC-V SoC(s) represents a major shift from their previous Arm-only approach.
It will likely take several more years for RISC-V to reach parity with Arm, with second-tier providers like Huawei potentially leading the way. Despite Arm's dominance, companies like Tensorrent and Esperanto see far more opportunity in the data center with RISC-V.
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