FORTUNE -- Much has been made of the upcoming leadership transitions at chip rivals ARM (ARMH) and Intel (INTC). But it's unlikely that the battle plan will change for either side. Both companies chose long-time insiders to take the helm—Intel COO Brian Krzanich will become CEO later this week, and ARM's Simon Segars, currently the company's president, takes over in July. So it's hard to imagine sweeping changes in either camp. Besides, it's not clear that ARM, which licenses its chip architecture to the likes of Qualcomm (QCOM) and Nvidia (NVDA), is in need of massive transformation. Though much smaller than Intel, the British chip designer isn't dependent on the lackluster PC market. ARM-based chips power 95% of mobile phones, and the company is now trying to venture into new markets like lower-power servers. Fortune recently caught up with Segars, ARM's incoming CEO, to find out about his plans for the company, the rivalry with Intel and the state of Moore's Law.
FORTUNE: You're often viewed as head-to-head competitors with Intel, yet you have such a different model. Is it fair to constantly compare you to them?
Segars: Intel is a semiconductor company; we are not. Qualcomm, Samsung, Nvidia, Marvell, etc. are semiconductor companies. In the mobile device, the competition is between Intel and all those other guys. All those other guys use the ARM architecture and are dependent on us to keep that relevant. But at the business level it's Intel competing against ARM's customers. For our part we take that very seriously. It's a competition for sockets among Intel and our licensees, and we can't just sait there and say, "Sorry you lost that one." Because if those sockets are lost, then it impacts our volumes and our royalties. So we need to be sure that we keep developing great microprocessor technology to help support our customers in creating products which deliver the best user experience.
Intel's greatest asset is its fabs and manufacturing power. What's yours?
I think it's the partnership base. You can have great technology, but the best technology doesn't always win out. For us it's been the combination of great technology deployed through the business model that has made ARM successful, and it's helped people build innovative devices at lower cost. I think the benefit of that has been greater diversity in the silicon that's enabled greater diversity in the end product. It's about enabling choice so that as a consumer you can go into a store and go, "I'll have that one." You've got a lot of choice there because there is money available through the supply chain for innovation to happen at different points, unlike PCs where two people have controlled it and the person that makes PCs runs on 2% profit margin and can't afford to innovate in anything other than which shade of grey the plastic is.
Are there changes that need to take place at ARM?
Under Warren's [East, ARM's current CEO] leadership we've had an incredibly stable team. But over the last couple of years it's no secret that a couple of executives who've been there a long time have left. The current team is different from the team that got us here. I've been there a long time. My challenge right now is making sure that the team continues the path forward that we've enjoyed the last couple of decades. There's nothing structural about ARM's business that says the model that we have doesn't apply anymore. In fact what we have is even more applicable today as we face economic challenges and technology challenges. This partnership model is a great way of addressing this. So that doesn't worry me at all, and the demand for semiconductors doesn't worry me at all. It's about keeping it all going -- making sure that the leadership team at ARM is effective, that employees get where we're going, that as the company grows we don't lose the culture. These are not unique challenges to ARM.
What's different about the conversation around Moore's Law today versus 10 or 20 years ago? (Moore's Law states that the number of transistors the industry can place on a computer chip will double every 18 to 24 months).
What's different is that there's enough history to say the technical challenges can get solved. What people now talk about is, now that we've solved them, is it economically viable to use the technology solutions. That's what people are worrying about more now on the Moore's Law conversation than they ever were. Previously it was about what are we going to do to shrink the transistors. The cost per transistors has gone down exponentially. Moore's law isn't a law, there's no natural thing behind it. It's a prediction that has held up. Now people are worried about does the cost per transistor start to go up, and if it does, what do you do about that. There's plenty of research going on into alternate materials, carbon nanotubes, all these things are being worked on in a lab somewhere to keep scaling. But whether you can afford the solution at the end of the day is the challenge. I'm not worried about people saying, well unless the next generation comes along the world will end. There are plenty of ways to use the technology as it exists today in more and more creative ways.
Your current CEO is leaving at a rather young age, and Paul Otellini (Intel's outgoing CEO) is stepping down ahead of when everybody expected. Why do you think this is?
I can't speak for Paul Otellini, but I've known Warren very well, and he's been the CEO of ARM for 12 years, which is a long time to be a CEO. It's clearly a demanding job. It is 24/7, and you fly a lot. At some point in anyone's life you say, "You know, I'd like to go do something else for a while." Warren's been doing this a long time. He wants to hand it over to someone else. We share a lot of common philosophies, but naturally we're different people, we'll have a different approach. I've got a little bit of an age advantage on him, and hopefully I can put up with lapping the planet for a few more years, and based on my knowledge of the company I can keep moving us in the right direction.
Former CEO's book tells the story of one of the most aggressive lawsuits in corporate history -- to a point.
By Roger Parloff, senior editor
FORTUNE -- From 2004 to 2009, Advanced Micro Devices, the perpetual underdog semiconductor manufacturer, launched worldwide antitrust litigation against its much admired, much feared, near monopolist competitor, Intel. In submissions to competition authorities and courts, AMD charged that Intel was breaking the law to preserve its dominant MOREMay 2, 2013 11:25 AM ET
Some of the world's most well-known and powerful tech titans -- IBM, Microsoft, Intel -- are marked by trying to manage declining aspects of their businesses.
By Kevin Kelleher, contributor
FORTUNE -- At its heart, the tech industry is about the new. Today, tech giants succeeded because of what was new yesterday. The flip side is that the new ages into the old more quickly in tech than in most other industries. MOREApr 23, 2013 6:51 AM ET
Chipmaker AMD hasn't had it easy. Now three of tech's most powerful companies have embraced it for the long-term.
FORTUNE -- With its processors in 83% of PCs, Intel (INTC) overwhelmingly dominates traditional personal computing. But there's one area where the chip giant won't be winning any time soon: game consoles. If reports prove correct, Advanced Micro Devices (AMD) could manage what its competitor hasn't: getting its chips into all three of MOREJP Mangalindan, Writer - Apr 11, 2013 7:14 AM ET
The chip maker got out of the consumer device business long ago. It's now realizing that it can no longer afford to take a backseat, even if it doesn't sell directly to mobile users.
FORTUNE -- Anyone who witnessed Qualcomm's opening keynote at the recent Consumer Electronics Show in Las Vegas knows that the mobile chipmaker is trying to get some mass market attention. What else could explain guest appearances by Big MOREMichal Lev-Ram, writer - Feb 19, 2013 10:00 AM ET
Yes, The Black Eyed Peas frontman is an international pop star. But he has also become a trusted source for some of the world's biggest brands. Meet corporate America's consigliere of cool.
By Daniel Roberts, reporter
FORTUNE -- Will.i.am's car is careening across the 405. The cabin of his electric Tesla is eerily silent as the vehicle slides over three lanes of irate Los Angeles traffic. The rapper, whose given MOREJan 3, 2013 5:00 AM ET
Diminutive smartphone chips will help power-hungry data centers cut down on costs.
FORTUNE -- The next time you upload a photo to Facebook, consider this: All those pictures have to be processed and stored somewhere, presumably forever. Some 3 million data centers occupy more than 600 million square feet of space in the U.S. alone to help do so. Trouble is, a single location can slurp as much power as a MOREMichal Lev-Ram, writer - Dec 12, 2012 5:00 AM ET
The tech giant faces difficulties ahead as the chip market changes. Here's what the company's next leader must do.
By Kevin Kelleher, contributor
FORTUNE -- Anyone care to run an $54 billion-a-year tech giant? Anyone have any good ideas how to get it growing again? Intel is looking for a new CEO to take the reins at the Silicon Valley icon next May, when Paul Otellini steps down from the job.
Since Otellini became MOREDec 5, 2012 7:27 AM ET
Microsoft's post-PC dilemma couldn't be clearer in Mary Meeker's latest slide show
FORTUNE -- Kleiner Perkins' Mary ("Queen of the Net") Meeker gave her annual Internet Trends presentation at Stanford University Monday night, and as always her slide deck is a trove of cleverly presented data.
The chart above builds on the work of Asymco's Horace Dediu to show the rise and fall of what for decades seemed the unassailable duopoly of MOREPhilip Elmer-DeWitt - Dec 4, 2012 7:53 AM ET
Two of tech's hottest trends - powerful analytics and mobile gadgets - are making their way into hospitals. They could soon be saving lives.
FORTUNE -- Fans of television medical dramas are probably aware of the grim condition known as septic shock. But few people know that sepsis, a disease that causes the body to attack itself in an attempt to fight off infection, kills 258,000 Americans each year. Though easy MOREMichal Lev-Ram, writer - Dec 3, 2012 5:00 AM ET
|McDonald's gives Charles Ramsey free food for a year|
|Make $30 an hour, no bachelor's degree required|
|Why doesn't Apple cut its prices and sell more iPhones?|
|The 'chicken poop' credit and other bad tax breaks|
|Where your donation dollars go|