Will a Queen or King Be Twisting Your Arm?

The small land mass country of Great Britain has throughout history projected great power. Ruled by Queen Elizabeth II, the Brits have extended their influence in the age of technology with a chip.

In 1990, a small Cambridge company named ARM, designed the electronic gateways of a computer chip that used very little electric power. Nobody took notice at first. America’s Intel made chips that were faster and better at raw processing of information. But along came mobile and tablet computing devices that ran on batteries. Suddenly, there was demand for a chip that saved battery hours. The ARM had life!

ZDNet says it best, “ARM chips strike a balance between energy consumption, processing power and cost” (Source: Inside ARM: The British success story taking the chip world by storm, ZDNet, Dec. 7, 2012).

Today, ARM chips are found in 95% of all smartphones. They power Android tablets and Apple iPads. MP3 players, digital cameras, smart credit and debit cards, and even antilock brakes employ the ARM.

The chip enables moderate processing power using low amounts of electricity. Stated another way, my mobile phone can do more longer than my laptop.

The British company ARM does not manufacture this chip. They merely design it much like an architect draws plans. They then license rights to produce their chip design to other companies like Samsung and Texas Instruments.

Forbes magazine estimates licensing and royalty rates return unheard of gross margins of 95 percent, and ARM re-invests 1 of every 2 dollars into R&D (Source: As Gadgets Shrink, ARM Still Reigns as Processor King, Forbes, Sept. 20, 2013).

There is an analogy to be made here. This is not the first time an underpowered thing has crept into America upsetting the economy. Japanese cars, those fuel-sipping things, slipped onto our roads and devastated American automakers. Intel, the muscle car maker of computer chips, faces the same situation against the British ARM.

While our thinking is stuck in racing gear, others downshifted to meet the demand under our noses, that of low fuel consumption, whether gas or electricity.

It seems the British once again have launched their ships around the world!