>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.

nerdsniper 4 hours ago | parent | next [-]

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.

	▲	dash2 9 minutes ago \| parent \| next [-]
		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.
	▲	amelius an hour ago \| parent \| prev \| next [-]
		They must also believe that stock prices represent actual value. I guess they use a very limited definition of the word "value".
	▲	concinds 3 hours ago \| parent \| prev [-]
		"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.

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jillesvangurp 2 hours ago | parent | prev | next [-]

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.

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cyode 6 hours ago | parent | prev [-]

Do you really think it’s equal or are you contesting the value creation/capture dichotomy writ large?

	▲	intrasight 6 hours ago \| parent [-]
		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.