Today, Qualcomm (QCOM +0.74%) has what is likely the most robust product stack in the mobile silicon game. In addition to a suite of applications processors (with or without integrated modems), the company also offers discrete modems as well as RF Front Ends. There is no semiconductor company today that offers the breadth and depth of Qualcomm's mobile product offerings as well as its revenue base. This has traditionally afforded Qualcomm the R&D budget to custom tailor just about every one of its IP blocks, including the CPU.
Qualcomm's 64-bit stack is all ARM CPU IP
Since Apple (NASDAQ: AAPL) made "64-bit" practically a requirement for smartphones thanks to its implementation of the ARMv8 64-bit instruction set in its A7 system-on-chip, the race has been on to get that marketing checkbox checked. Qualcomm, whose former chief marketing officer had previously dismissed 64-bit as a gimmick, very deftly put together an entire 64-bit product stack from the very low end Snapdragon 410 intended for sub-$150 phones to the Snapdragon 810 intended for phablets and tablets.
The interesting thing here is what while Qualcomm has typically used its own processor cores at the high end and mid-range while implementing ARM's (ARMH +0.00%) designs at the low end, Qualcomm has gone full-on ARM across the stack from the very lowest end to the highest end. The latest-and-greatest Snapdragon 810 sports four ARM Cortex A57 cores running at up to 2GHz as well as four ARM Cortex A53 cores for low power tasks in a big.LITTLE configuration.
Does this matter?
In Qualcomm's press release, the company claimed that it was still hard at work on a custom 64-bit core. While there is little reason to doubt that the company is doing so, there's a real philosophical question that needs to be answered here: Should Qualcomm even bother investing that much in a high-end custom core? While some will say, "Yes, absolutely," I take a contrarian point of view and say that no, it's not actually necessary.
Qualcomm hasn't differentiated much with Krait...
Qualcomm's line of custom CPUs is called Krait, with various numbers following (e.g., Krait 200, Krait 300, Krait 400, and so on). These processors have usually been very good, but neither the performance nor the power consumption of these cores has been dramatically better than those using stock ARM cores. In fact, the ARM Cortex A15 seemed to offer similar to superior performance to Krait 400 in a number of tests in a similar power envelope when the A15 was implemented by a company with a skilled physical design team, like Samsung's.
Further, a mobile system-on-chip and, in particular, a smartphone-oriented system on chip is so much more than a CPU and a graphics processor. In fact, see below for a rough representation of the kinds of blocks you'll typically find in a top-end smartphone processor:
Source: Qualcomm.
Take a close look. In a typical high-end system-on-chip, you have the following blocks:
- Memory controller
- DSP/sensor hub
- Multimedia engine
- Image signal processors (i.e. camera)
- Modem
- Display processing
- GPU
- GPS
- CPU
In lower-end ones, things like connectivity will be integrated into the chip as well. However, the point is that the CPU is just one part of the entire equation, and it's the integration of all of these IP blocks and delivery of product on time and on target to the customer that matters. If Qualcomm can do a strong physical implementation of the "stock" ARM cores and deliver a highly integrated, fully featured system-on-chip, then neither the OEMs nor end users will care if Qualcomm could have squeezed an extra 5-10% or so of performance/watt from just the CPU block.
Foolish bottom line
While some may get hung up on Qualcomm using "stock" ARM cores, the reality is that ARM's cores are actually quite good and if implemented in a well-balanced system-on-chip surrounded by leadership IP, then the chip is likely to perform well technically and financially. And given that most of Qualcomm's chip volume has included stock ARM cores anyway, this doesn't seem to stop Qualcomm from being the most profitable mobile chip vendor and the most valuable chip company on the planet at a market capitalization of $137.52 billion, ahead of the second-place company at $134.31 billion.
