Arming SoCs to capture 30% of the PC market by 2026: analyst

Apple’s rapid transition to Arm-based systems-on-chips has shown the industry just how possible such a change is if designed correctly. Canalys analysts estimate that Arm’s architecture is progressing so rapidly that Arm-powered SoCs will take a significant share of the PC market and half of the cloud server market in just four years. But not everyone in the industry is so optimistic.

“By 2026, not 2050 but 2026, in four years half of cloud processors will be ARM-based, 30% of PCs will be ARM-based,” said Steve Brazier, president and CEO of research firm Canalys market, during an event, reports DigiTimes (opens in a new tab). “This is an extraordinary event and an industry-changing event that just hasn’t been taken seriously enough.

30% of PCs by 2026

Arm already controls a significant portion of the PC market. Nearly 100% of PCs sold by Apple are based on M-series SoCs these days, and as of Q3 2022, it controlled 13.5% of the PC market when it comes to units, according to IDC (opens in a new tab). Additionally, the company increased its unit shipments of Macs from 7.174 million in Q3 2021 to 10.060 million systems in Q3 2022 amid deteriorating demand, which is quite an achievement. Meanwhile, Arm-powered SoCs are also powering loads of cheap Chromebooks. While such systems aren’t hugely popular, it’s probably safe to say that the Arm architecture has already commanded at least 15% of PC cases sold in Q3 2022.

According to Dean McCarron of Mercury Research, this assumption may be a bit too optimistic. It estimates that in Q3 2022, Arm ordered 13.1% of PC client processors, compared to 9.4% in Q2 2022 and 8.9% in Q3 2022. It should be noted that if IDC counts PCs sold , Mercury Research counts processors sold. and GPUs, which could be sold this quarter or next. Given the inventory correction at PC manufacturers and the increase in PC sales from Apple, it is reasonable that the share of x86 processors sold fell in the third quarter. Either way, Arm’s processor share is growing because of Apple and Chromebooks.

“We note that in the Chromebook market, it looks like Arm’s share seems to have increased in the quarter, even though the market was very weak,” McCarron told Tom’s Hardware.

Arm vs x86 Consumer market share Q2 2022

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via mercury research
Arm vs. x86 Market Share QQ22 2Q22 1Q22 4Q21 3Q21 2Q21 1T21 4T20 2T20
Sharing the arm unit 13.1% 9.5% 11.3% 10.3% 8.3% ~7.0% 5.9% 3.4% Less than 2%

The head of Canalys believes Arm has the potential to grow further in the PC space, especially if other top PC vendors such as HP, Dell, Lenovo, Acer and Asus come up with their own SoCs based on Arm. However, he never mentioned – at least according to the DigiTimes story – Qualcomm’s efforts to integrate its Snapdragon platforms into always-connected laptops from Lenovo and HP and then come up with something more powerful based on the Nuvia technology. However, Qualcomm could become an important player, especially in notebooks.

We can hardly imagine HP, Dell, or Lenovo developing their own Arm-based SoCs to differentiate their PCs from each other and provide unique competitive advantages. Developing chips is expensive these days, and since these companies sell tons of PCs with completely different configurations, they’ll need several different SoCs to cater to all of their markets. Given the relatively low profit margins in the PC market, these companies are unlikely to try to replace their processors with those from AMD or Intel. During this time, they can start ordering custom builds of chips from leading processor designers. With multi-chip designs like Intel Meteor Lake, it should be fairly easy to add a third-party IP address to the processor, although we’re speculating.

It remains to be seen whether the Arm architecture will indeed capture an additional 15%-17% of the client PC market over the next four years as Apple gains market share (although we wouldn’t expect Apple to control a third of the PC market by 2026) or because the joint effort of Apple, Qualcomm and MediaTek will play its part. But with so much work happening around Arm, the technology is poised to increase adoption.

Meanwhile, Arm adoption in the Windows space will largely depend on the experience of Arm-based machines running Windows 12, which happens when Qualcomm rolls out its Nuvia-based Snapdragons.

“It will be an incredible shock for Intel and AMD to suddenly find themselves fighting to protect their business,” Brazier said.

50% of cloud servers by 2026

Servers are another frontier the Arm architecture has entered fairly recently thanks to data center-grade SoCs from Ampere, AWS, and Huawei. According to Omdia, Arm SoCs controlled around 7.1% of the server market in Q2 2022. Omdia only tracks data center machines, so we are talking about blades, rack servers, white box servers used by hyperscalers, tower servers and hyperconverged infrastructure servers, but not edge servers , mission/business critical machines and other niches. markets.

In the coming years we’re going to see more Arm server processors from other manufacturers, such as SiPearl and the Chinese cloud giants, assuming they can develop SoCs that they can produce in volume with decent yields. and ship them to China without violating recent US export regulations. Therefore, Arm’s share in data centers will increase.

As the costs of running cloud machines increase, it makes sense to design highly customized SoCs for specific applications, and Arm-based processor cores can be customized to meet the requirements of particular applications. Additionally, SoCs are, by definition, designed with specific requirements in mind.

In fact, even Intel recognizes that custom chips make a lot of sense for cloud servers, which is why it’s ready to produce both Arm-based and x86-based SoCs for IFS customers as part of the IDM 2.0 strategy.

But neither Intel nor AMD are giving up half of the cloud server market without a fight. AMD is about to release its 128-core Bergamo codename processor based on Zen 4c microarchitecture optimized for cloud and hyperscalers. Intel, on the other hand, incorporates many special accelerators into its 60-core Sapphire Rapids processor to meet the specific needs of businesses and hyperscales.

However, not everyone needs Arm-based servers. Companies that use tens of thousands of servers are likely to adopt Arm since they are running applications developed for x86, and the advantages of Arm for them are not obvious. Therefore, Brazier believes that cloud servers will be the primary market for Arm-based SoCs to initially address. He estimates that Arm’s advantages in this market are so great that the architecture will be used by 50% of cloud server SoCs.

In the coming years we’re going to see more Arm server processors from other manufacturers, such as SiPearl and the Chinese cloud giants, assuming they can develop SoCs that they can produce in volume with decent yields. and ship them to China without violating the recent US. export regulations. Therefore, Arm’s share in data centers will increase.

As the costs of running cloud machines increase, designing highly customized SoCs for specific applications makes sense, and Arm-based processor cores can be customized to meet very specific application requirements. Additionally, SoCs are by definition designed with specific requirements in mind.

In fact, even Intel recognizes that custom chips make a lot of sense for cloud servers, which is why it’s ready to produce both Arm-based and x86-based SoCs for IFS customers as part of the IDM 2.0 strategy.

But neither Intel nor AMD are giving up half of the cloud server market without a fight. AMD is about to release its 128-core Bergamo codename processor based on Zen 4c microarchitecture optimized for cloud and hyperscalers. Intel, on the other hand, incorporates many special accelerators into its 60-core Sapphire Rapids processor to meet the specific needs of enterprises and hyperscale customers.

However, not everyone needs Arm-based servers. Companies that use tens of thousands of servers will likely adopt Arm because they are running applications developed for x86 and the advantages of Arm for them are not obvious. Therefore, Brazier believes that cloud servers will be the primary market for Arm-based SoCs to initially address. Apparently, he estimates that Arm’s advantages in this market are so great that the architecture will be used by 50% of cloud server SoCs.

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