Rene Haas, CEO, Arm
Interviewer: Brian O’Keefe, FORTUNE


Brainstorm Tech 2022: Inside A Chip Designer’s High-Stakes Reboot

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 Rene Haas, CEO, Arm
Interviewer: Brian O’Keefe, FORTUNE


Inside A Chip Designer’s High-Stakes Reboot


Brainstorm Tech 2022: Inside A Chip Designer’s High-Stakes Reboot


Hello, Renee, thanks so much for being here. So you have had a pretty eventful five months or so you became ceo of arm in february um, elevated into that role. That was the same month that the planned acquisition of arm by NVIDIA was called off. You are running this company based in Cambridge in the UK and you're in SAn Jose. Um, so you just flew here from London as you were just telling me. Uh, so have you had a chance to breathe yet in this five months as much area as you can take in at this altitude? So what, you know, my hall mentioned the I. P. O. There's been a lot of talk about that. Obviously I should mention that you're owned by Softbank. Softbank acquired the company in 2016 for $32 billion I think. Um, there's been a lot of speculation and reports about what's happening with the I. P. O. You've talked about it a little bit, um, possibly a listing on the NASDAQ and a second listing in London. What can you tell us about it? What's the latest? I'm gonna be a little boring here and stick to the comments that were made back in february when we announced that the video transaction was done. Uh, Our chairman announced that the intention was to take our public, we hope to do that sometime before the end of our fiscal year, which for us is March 31 2023. And right now that is uh, about all, unfortunately I could say on the topic, but that is the plan we're on right now moving forward. That plan presumably that would bring in um an infusion of Capital which you welcome I'm sure. And we'll get to what your your plans might be with that. But I wanna just you know maybe help have you elucidate a little bit. Arm has a unique place in the tech ecosystem. You're not maybe that well known to consumers but there are more chips based on your technology shipped every year than any single other chip company, 29 billion chips last year. Um So how did arm end up in this in this corner of the tech world? And uh you know what are the advantages or disadvantages to being in that that corner we're we're a pretty important company that that many people probably have not heard of. Uh So first off we're we're in the heart of the semiconductor world but we don't build chips. The way you think about what we do is we do designs blueprints, if you will, of microprocessors we license those designs to people who make chips and then they go ahead and make the chips and put them in pretty much any kind of device you can imagine. And I can probably assure that but every person in this room probably has either an arm device with them today. We're just about every single smartphone but also probably in your home or through the data center. We started about 30 years ago we grew in Cambridge. Our first technology went into a product for those of you who might remember called the Apple Newton, which was a P. D A a way, way, way before its time. But uh, the lineage of the company was really around low power. It was around devices that operate off a battery. And uh and we really grew from that and uh and our our real initial footing was in in the smartphone market. We started with mobile phones then onto smartphones. If you have a question, raise your hand and we'll get a mic to you and uh my personal have a paddle and I'll call on you. Um, so the semiconductor shortage has been a huge headwind for all industries for months and a huge story and uh you were saying, you know, the biggest question you get asked uh, is what you're seeing with the economy, what you're seeing with the chip shortage. So what are you seeing? I'll just ask you again, you know, I I as we talked about before, I I feel that that the chip shortage is with us for for for a while and the reason there's a few reasons for this in my own opinion. First off the pandemic, really saw an acceleration of digitization of everything, whether it was again smartphones but obviously automobiles data center IOT we just saw a very rapid acceleration of that at the same time. Uh there had been not enough investment into key fabs that that drive this technology. And increasingly we're seeing more and more of the the advanced nodes, seven nanometer five nanometer three nanometer. This is the process geometry that is used to build chips. The need for more and more compute power was obviously on top of us and we didn't have enough capacity there. So I think we had all of that that was layered on top of it, that has created this, this shortage. But I also believe that the pandemic has really tipped a lot of things on its side relative to just fundamental supply chain. It really doesn't take much more than one region in one province to be shut down and the supply chains that go out to the harbor not being able to bring product to put everything in a total disruption. I mean we've had shortages such as baby formula, we've had toilet paper, we've had female hygiene products, you name it, products that, you know, looking backwards, we never would have thought we would have any issue regarding supply. So then you layer onto that, the complex, uh, what it takes to put together a semiconductor chip. Um, there's just a lot of complexities and interdependencies across different parts of the value chain. So I personally think we're in it for a while. Um you know, the the economy now we're talking about a recession, but I can tell you that from the world that we see demand for our products has never been higher. And again, I think there may be short term slowdowns, but the long term secular growth, I think is going to be very strong. So I think we have a question right here, if you could just quickly identify yourself with forge, Um I was just curious on your take on kind of a $52 million billion dollar subsidy related to intel in Ohio. And what's your, what's your view there given kind of especially competition with china and such. Yeah, So I think um you know, for those who are familiar with what that is all about, there is intel is looking to build a factory in Ohio and there's an act in Congress right now called the chips act, which is really about getting government funding for helping subsidize that. I think it's quite needed personally. I also think that right now the concentration of fabs have moved away from the U. S. And europe and they've moved more towards the to to Asia, Taiwan china and Japan and Korea. I think going forward this needs to be much more distributed. Uh not only in the US and europe, But 30 years from now, I would love to see fabs in India fabs in Africa across the entire entire planet. The technology is so fundamental. There's a lot of comparisons between semiconductors and oil that you really want to have no single point of failure relative to geography, is that have those factories. So I'm for it interesting. And we have another question right down here. Hey jake um with a software company called Bushel in Fargo North Dakota. And my question is Uh maybe two things, but one is kind of simple. What's your view and how his arm thinking about um uh the quantum computing world. How does that kind of play into your, your thought in the future and then second to that. How are you thinking about how you can help on the sustainability game? We've got a lot of investments happening on how do we get to Net zero and all these different areas. How do you think about some of that in your future? Yes. In the quantum world it's a really interesting question. Just relative to when, when is quantum computing going to be going to be real and real in the sense of produce herbal and and able to be economically viable for a lot of solutions. I can envision a world where an armed computing world sits next to a quantum computing world and they kind of coexist where there's traditional computing that runs and think of quantum as the accelerator, all accelerators. If you will at the speed it can run uh, on the efficiency question. That's a that's another very, very important question. And I think for us as I mentioned, the company was sort of born uh from operating off a battery. Uh, it's the heart of everything that that we do and we see increasingly whether the application is a, is a cloud data center, uh, a new data center has to be built, uh, the energy footprint is fixed, the square footage is fixed, but the amount of compute power is not fixed. So being incredibly efficient and sustainable, it is a must have uh, electric vehicles as we move towards the electrification of all vehicles and these vehicles have more and more chips inside them. In fact, I saw a a blur from Volkswagen that said the Porsche Tech in has 80,000 chips Inside it, which is a incredible number. 8000, not 80,000 8,000 8,000 8000 um, that there's a lot of energy and if you're going to have an electric vehicle that needs to obviously run and move the vehicle, uh, you can't really have a lot of extra power for all this computerized um, logic. So a lot of work that has to be done there, it's very, very central to what to what we do. So that was two interesting questions there and one about Quantum and you know, in terms of future technology. Another big theme we've been discussing the last couple of days is the metaverse. And I've seen you mention that as a potential growth area for the company, how do you think about the metaverse? And you know, obviously you'd be designing chips for the systems, they're gonna power, you know, the many iterations of that, But like when you're kind of looking out and thinking about what kind of chip design you need. How are you thinking about the metaverse to to guide you? Yeah, so the metaverse means many things to a lot of people. The way we tend to think about it is a uh an extension if you will of some virtual world either for gaining or for work or or other applications, I think it's going to have its own ecosystem, its own compute capabilities, its own software that needs to run on it uh ecosystems and high content software. That's our that's really stuff that arm is really good at. So we are very very heavily invested in that uh whether the footprint is a set of glasses or or these large VR glasses, I can almost imagine a world someday 10, 15 years where the image is actually a hologram and it's being projected out of something that maybe sits behind your ear and you may not actually have something you know, in front of you, you can just click that on and get a a virtual avatar that come up. It's it's been very obvious that, you know, during the pandemic, that there are certain aspects where that works well. I mean the virtual environment, the way we've been working for the last couple of years uh there are areas where that might be a really good replacement but I also think there'll never be any real replacement for for in face meetings. But I think the metaverse for us really means a brand new ecosystem and we're, you know, we're really excited to see what that will bring. So you have restructured, reorganized the company into these industry oriented verticals, I think you had already done that before you became automotive and industrial consumer devices like, you know, smartphones and tablets, data centers, Why did you do that? What what is that enabling you to do? And you know, is that scalable? Is that, did you do it with the intent that you can scale better that way? Yeah, so what we had prior to that change was what I would call a horizontal structure and we might be designing a product that would be a one size fits all. And what we were starting to see was an increased specialization that these markets were requiring, you know, for example, for the data center, the microprocessor that runs in the data center has different requirements than that. One runs in the smartphone, it needs to be more powerful, it needs to be able to run at higher speeds, need some different levels of efficiency. Uh, for automotive, we saw things such as functional safety that need to be incorporated in the processor that didn't fit well relative to our horizontal model. So we made that pivot. Um and we were able to make that pivot while softbank was owning us, which meant that we could make some extra investment with that, which was good and we could do that while we were part of Softbank, so we didn't have to report our earnings publicly at the time and now we're starting to see the fruits of that, of that investment. We, we finished our last fiscal year that we announced at the end of March with record revenues, record profits, the most chips we've ever shipped and the most of the growth really came in these new markets was an automotive, the cloud and in Iot, how quickly do you see the E V revolution spreading or scaling? I mean you mentioned you know that these cars are going to be super intense, chip intensive um, numbers are growing, but do you see like a tipping point where it really takes off hard to put a number on it, but if I was to measure it just by the level of intention that we're getting from senior executives in the auto industry, uh, everyone is now on it. Uh, everyone has looked and seen what the, what Tesla has been able to do, but more importantly, the benefits that those vehicles bring particularly back to the sustainability story. So I do think it's going to accelerate very quickly now we have the level of design engagement, we have with all of the people doing the automotive work has never been higher. Uh, and I do think we are, we are close to that tipping point um, all I can say is we see from an investment standpoint it's very high now, so in addition to the chip shortage, there has been a very, very tight market for talent, there's a, you know, giant demand for talent, how are you addressing that? How much is that affecting your ability to be as aggressive as you want to be or grow as fast as you want to grow and and what are you doing to find talent perhaps in new places? Yeah, well, well, well first off we have lots of open or extra engineers there on our website, so I'll start if anyone here is interested, come see me afterwards, we're looking for all kinds of engineers. Uh more seriously, we hire from really two primary channels. Uh we do a lot of university hiring, we take a lot of people in, from universities in Cambridge in France, we have big design centers in in the nordics in the US, so we look for a lot of new graduate engineers and we hire a lot of those folks and then of course other folks who, who come from other industries, we are able to attract a lot of, a lot of talent interim, it's it's still challenging but but people like to work on microprocessors and and the things that we work on with microprocessors are really the brain of the technology, the brain of these, these devices and when layer, when you layer onto that machine learning and ai people like to work on the problems that are solved. Uh but a lot of companies are doing it well and the fight for talent is pretty fierce. Yeah. So wait, let's stand up real quick. I'm 64. You can see he's tall, we can sit back time again. You still play much much your credit. I don't play basketball anymore, but you still do uh is that like, do you have to report into the board on any injuries you get when you're on the court? Is that like considered like a real dangerous? Yeah. I used to play a lot a lot of basketball my younger years, I still play some now people from the outside and watching right, watch me play now and say, well that's not exactly basketball what you're doing out there. But no, thankfully Masa does not ask me to fill out a writer or anything of that nature, but I know that you you brought basketball into your management mindset. Can you tell us a little bit about where you look for inspiration and how you use that? I think basketball is the it's the ultimate team game uh you know, for starters, which is why I enjoy playing it. But I also think it's a great metaphor for for working together because uh in basketball um the best five, the best talent doesn't always win. What does win is incredible. Teamwork, trust in your teammates and a transparency in terms of how you operate. Um that translates fairly well to to the corporate world. And uh I really like it as a, as a as a metaphor for for how to operate. So yes, I do. You know, I do like sort of the fundamental principles and if you watch a basketball team play, they'll have set plays, but then teams will know the teammates will know where is your teammate going to be at this time. How are they going to move where they like to get the ball and it moves almost like jazz music and that's how kind of great leadership teams work together. They know the strengths and weaknesses of their team. They're aligned very well and they can get the great results. So you, you talked a little bit about E. V. S. You talked about data centers. Um where else do you, you know what else when you're looking out into the future is exciting to you about, you know, where, where the tech world is going and you know, there are opportunities for you but that you're going to help drive. I think that the metaverse again is is a is kind of a a green field and again, I go back to this kind of this this holographic type of display technology. I think there's gonna be a number of things that tie into that that will really really change how we work and operate. You know right now, for example, your your cell phone is your heartbeat and if anyone was to lose their cell phone, you know in this room and or left it and at another area and had to get it back they would feel like they've they've lost their their heart attack, panic attack. Uh There will be a time and place where that just won't happen. Uh You'll have all kinds of digital twins. You may be able to use much more biometrics relative to identity management and the smartphone. Maybe just more of a display that you move with. But your heartbeat and how it's connected to you would be much more on your person. And I think there's a huge opportunity for for where that goes. We've we've become so reliant on these devices and again as I said if we were to lose one or it goes bad, it's a it's a catastrophe. Um there's a huge opportunity to do a lot of different things around that. Which would be exciting. How far out is that? I think you tell us when the I. P. O. Is. So you can tell us that there's a lot of work going on. You know, you know in this space when you think about everything going on with with cloud computing and near field devices and uh things that operate in together. There's a lot of people working on. There's a lot of things that need to come together to make all that work. But I'm pretty confident we'll see a future that day. Great one day. Well, thanks so much. I hope the next five months and five months after that are just as exciting, but that you get a little rest in and thanks for sharing, uh, you know, the what you're doing at arm and a little vision of the future of tech and how you're gonna enable it. So thanks for being here. Okay. Thanks.