Comment by intrasight
6 days ago
>Yet Arm’s current model captures only a sliver of the value it creates.
No, they capture exactly the value they create.
As a long time (40 years) subscriber to The Economist, I expect better of them.
6 days ago
>Yet Arm’s current model captures only a sliver of the value it creates.
No, they capture exactly the value they create.
As a long time (40 years) subscriber to The Economist, I expect better of them.
The value of ARM is that it's a cheap commodity that you can license instead of reinvent. That's why there is a range of chip makers that now produce ARM chips instead of or in addition to their own designs. Other chip designs are available. Risc V is getting some traction. It will take a long time for that to catch up with ARM but of course if ARM raises their pricing that might provide an incentive to speed up development.
This feels like a religious belief. Somehow everyone captures exactly the value they create - no more, and no less. Amazing how perfect every transaction must be to ensure this is always true.
Actually, in most economic models of markets, the producer does not capture 100% of the value it creates. The exception would be a pure monopoly where I can do pure price discrimination and charge everybody exactly as much as they would pay. That is pretty rare for obvious reasons. So I don't know why GP expects this to be true of ARM.
> Actually, in most economic models of markets, the producer does not capture 100% of the value it creates.
See airlines who create enormous value, but remain terrible businesses. I think it remains to be seen if the AI companies can really capture the value being created as well.
They must also believe that stock prices represent actual value. I guess they use a very limited definition of the word "value".
"Capturing the value you create" is a euphemistic way to describe pushing producer surplus towards 100% and consumer surplus to 0%, your ability to pull it off depends on your monopoly power, and it would be more honestly described as "value extraction" than as "capturing".
I think in this case semantics matter.
True about semantics. "Capturing", "Creating", and "Value" are all rather fuzzy.
But false about my meaning, which was precisely the opposite of "a euphemistic way to describe pushing producer surplus towards 100% and consumer surplus to 0%"
My original comment "They capture exactly the value they create" was my (failed) attempt to restate the basic premise of capitalism, that profits tend towards zero, using the words at play in this discussion.
Do you really think it’s equal or are you contesting the value creation/capture dichotomy writ large?
I think both
Analogous to discussion 3 days ago
https://news.ycombinator.com/item?id=46994869#46995258
We're fast approaching 1 trillion Arm CPUs manufactured - because it was a good design for a good price.
No doubt unprecedented for something so complex to be produced in such volume. I predict that nothing else will ever achieve such scale.
The RISC-V growth is fairly spectacular; moving forward the CAGR is estimated at > 40%