Apple's rapid transition to Arm-based system-on-chips has shown the industry how swift such changeover is possible if architected correctly. Analysts from Canalys believe that Arm's architecture advances so fast that Arm-powered SoCs will grab a sizeable 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, four years from now, half of the cloud processors will be ARM-based, 30% of PCs will be ARM-based," said Steve Brazier, president, and CEO of market research firm Canalys, at an event, reports DigiTimes. "It is an extraordinary event and an industry-changing event that simply has not been taken seriously enough.
30% of PCs by 2026
Arm already controls a sizeable chunk of the PC market. Almost 100% of the PCs that Apple sells are based on the M-series SoCs these days, and in Q3 2022, it controlled 13.5% of the PC market regarding units, according to IDC. Moreover, the company increased its unit shipments from 7.174 million Macs in Q3 2021 to 10.060 million systems in Q3 2022 amid deteriorating demand, which is quite an achievement. Meanwhile, Arm-powered SoCs also power loads of inexpensive Chromebooks. While such systems are not very popular, it is probably safe to say that the Arm architecture already commanded at least 15% of the PC boxes sold in Q3 2022.
According to Dean McCarron of Mercury Research, this assumption may be a bit too optimistic. He estimates that in Q3 2022, Arm commanded 13.1% of PC client processors, up from 9.4% in Q2 2022 and up from 8.9% in Q3 2022. It should be noted that while IDC counts PCs sold, Mercury Research counts sold-in CPUs and GPUs, which might get sold this quarter or next. Given inventory correction at PC makers and increasing sales of Apple's PCs, it is reasonable that the share of sold-in x86 CPUs dropped in the third quarter. In any case, the share of Arm's processors is growing because of Apple and Chromebooks.
"We note that within the Chromebook market, is appeared that Arm's share looks to have increased in the quarter, though the market was very weak," McCarron told Tom's Hardware.
Arm vs x86 Consumer Market Share Q2 2022
| Arm vs x86 Market Share | QQ22 | 2Q22 | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 2Q20 |
|---|---|---|---|---|---|---|---|---|---|
| Arm Unit Share | 13.1% | 9.5% | 11.3% | 10.3% | 8.3% | ~7.0% | 5.9% | 3.4% | Less than 2% |
The head of Canalys believes that Arm has the potential to grow further in the PC space, especially if other leading PC suppliers like HP, Dell, Lenovo, Acer, and Asus come up with their own Arm-based SoCs. However, he never mentioned — at least according to the DigiTimes story — Qualcomm's efforts to drive its Snapdragon platforms into always-connected laptops by Lenovo and HP and then come up with something more powerful based on technologies from Nuvia. Yet, Qualcomm could become a significant player, particularly in notebooks.
We can hardly imagine HP, Dell, or Lenovo developing their own Arm-based SoCs for their PCs to differentiate from each other and offer unique competitive advantages. Developing chips are expensive nowadays, and since these companies sell boatloads of PCs featuring completely different configurations, they will need several different SoCs to address all of their markets. Keeping in mind the relatively thin profit margins on the PC market, it is unlikely that these companies will try to make their processors replace those from AMD or Intel. Meanwhile, they may start ordering customized versions of chips from the leading CPU designers. With multi-chiplet designs like Intel's Meteor Lake, it should be pretty easy to add third-party IP to the processor, though we are speculating.
It remains to be seen whether the Arm architecture will indeed capture an additional 15% - 17% of the client PC market in the next four years because Apple gains share (although we do not expect Apple to command one-third of the PC market by 2026) or because the joint effort of Apple, Qualcomm, and MediaTek will play its role. But given that so much work is happening around Arm, the technology is poised to increase its adoption.
Meanwhile, Arm adoption in the Windows space will largely depend on the experience of Arm-based machines running Windows 12, which happens to be 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," said Brazier.
50% of Cloud Servers by 2026
Servers are another frontier that the Arm architecture entered reasonably recently thanks to datacenter-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 hyper-converged infrastructure servers, but not about edge servers, mission/business critical machines, and other niche markets.
In the coming years, we are going to see more Arm server processors from other makers, such as SiPearl and Chinese cloud giants, assuming that they can develop SoCs that they can produce in volume with decent yields and ship them to China without violating the recent U.S. export regulations. Therefore, the share of Arm in data centers will increase.
As costs of running cloud machines are increasing, designing highly custom SoCs for specific applications makes sense, and CPU cores based on the Arm architecture can be customized to meet the requirements of particular applications. Moreover, SoCs are, by definition designed with specific requirements in mind.
In fact, even Intel acknowledges that custom chips make a lot of sense for cloud servers, which is why it is willing to produce both Arm- and x86-based SoCs for IFS customers as part of the IDM 2.0 strategy.
But neither Intel nor AMD is giving up half of the cloud server market without a battle. AMD is set to release its 128-core codenamed Bergamo processor based on the Zen 4c microarchitecture optimized for cloud and hyperscalers. Intel, on the other hand, is building-in loads of special-purpose accelerators into its 60-core Sapphire Rapids CPU to address the specific needs of both enterprise and hyperscale customers.
Not everyone needs Arm-based servers, though. Enterprises that use tens of thousands of servers will unlikely adopt Arm since they run applications developed for x86, and Arm's advantages for them are not obvious. Therefore, Brazier believes cloud servers will be the primary market that Arm-based SoCs will address initially. He believes that Arm's advantages in this market are so significant that the architecture will be used by 50% of cloud server SoCs.
In the coming years we are going to see more Arm server processors from other makers, such as SiPearl and Chinese cloud giants, assuming that they can develop SoCs which they can produce in volume with decent yields and ship them to China without violating the recent U.S. export regulations. Therefore, the share of Arm in datacenters will increase.
As costs of running cloud machines are increasing, designing highly-custom SoCs for specific applications makes sense and CPU cores based on the Arm architecture can be customized to meet requirements of very specific applications. Moreover, SoCs are by definition designed with specific requirements in mind.
In fact, even Intel acknowledges that custom chips make a lot of sense for cloud servers, which is why it is willing to produce both Arm- 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 battle. AMD is set to release its 128-core codenamed Bergamo processor based on the Zen 4c microarchitecture optimized for cloud and hyperscalers. Intel, on the other hand, is building-in loads of special-purpose accelerators into its 60-core Sapphire Rapids CPU to address specific needs of both enterprise and hyperscale customers.
Not everyone needs Arm-based servers though. Enterprises that use tens of thousands of servers will unlikely adopt Arm since they run applications developed for x86 and Arm's advantages for them are not obvious. Therefore, Brazier believes cloud servers will be the primary market that Arm-based SoCs will address initially. Apparently, he believes that Arm's advantages on this market are so significant that the architecture will be used by 50% of cloud server SoCs.
