ARM taps China to bring chip designs to emerging markets

To bring its microprocessor designs to emerging markets, ARM Holdings is looking to China and its growing number of electronics vendors to help pave the way.

“The Greater China region is becoming a key market to ARM, not just in terms of market share,” said Allen Wu, ARM’s Greater China president.

The U.K. chip designer has already been riding high on demand for consumer gadgets in the country. Its microprocessor cores, incorporated into the processors designed by companies including Apple, Samsung Electronics, Qualcomm and Broadcom, are used in nearly all smartphones, and many tablets.

But as more Chinese tech vendors expand to emerging markets, ARM hopes to ride that wave too.

In China, the U.K. firm is also serving a growing number of customers—from handset vendors to actual chip manufacturers—wanting to incorporate ARM’s technology into their latest products.

In 2013, ARM received 26 percent of its revenue from Greater China, by which ARM means the Chinese mainland and neighboring Taiwan, Wu said. Device shipments using ARM-based processors are increasing, and Wu expects Chinese vendors to report 2014 shipments up by at least 23 percent compared to the previous year.

China is now the world’s largest market for smartphones—but ARM’s revenue growth there is also fueled by the rising number of domestic tech vendors with ambitions to expand globally, especially in emerging markets where competition is less heated.

Chinese handset makers including Xiaomi and Lenovo are some of the better known names. Already, local electronics makers are exporting vast quantities of inexpensive phones and tablets to emerging markets such as Brazil and India, Wu said.

Chinese brands may have a bad reputation for selling shoddy electronics, but they’ve been quick to push out new products. In 2009, for example, Chinese vendors were already in talks with ARM about trying to produce an Android tablet, before Apple’s iPad arrived a year later, Wu said.

Since then, the Chinese vendors have matured, and are coming out with increasingly better products.

“Certainly a lot of them are mid to low-end, not really premium devices,” he added. “But if you look at the chips and products they shipped in 2014, versus what they shipped in 2012, there is an exponential improvement.”

ARM is hoping its latest chip design, the Cortex-A72, will help Chinese vendors make even more inroads into the international markets.

On Wednesday, the company held an event in Beijing announcing details of the Cortex-A72, which promises to offer 3.5 times more performance and better power efficiency over the older Cortex-A15 design.

Phones built with the chips are slated to start arriving next year. ARM already has over 10 licensees of the new design, at least three of which are based in the region. They include Taiwan-based MediaTek, and Chinese semiconductor companies HiSilicon and Rockchip.

Chinese handset makers have already shown they can excel at offering cutting-edge handsets, but at affordable prices, Wu added. It’s an appealing strategy that can work well in emerging markets, where there’s greater demand for lower-priced products.

“You can look at, for example, Africa. There are 700 million phone users there, and not a whole lot of smartphones yet,” he said. “That’s quite an interesting space people can expand into.”