Modesty is a source of pride at Arm, the UK’s largest tech company by market cap, whose microprocessor designs are used in nearly all smartphones. Simon Segars joined Arm in 1991 when it was based in a Cambridgeshire barn

July 7, 2013 2:28 pm

Simon Segars, Arm Holdings chief

By Henry Mance

Whatever attracted Simon Segars to his new job, it can’t have been his windowless office. Even his prize decoration – a map of the Arm7 processor that he helped design, complete with “72,000 beautiful transistors” – lies unframed on a chair. “The least glamorous company in the FTSE,” he jokes. Modesty is a source of pride at Arm, the UK’s largest technology company by market capitalisation, whose microprocessor designs are used in nearly all smartphones. “It’s inbuilt in the culture. We’re not glitzy and flashy, and we’re not about to shout about our success from the rooftops,” says Mr Segars, who took over as chief executive of the Cambridge-based group last week. That ethos is one sign of continuity with his predecessor Warren East, whose belongings are still in boxes in the next-door office.Since the handover was announced in March, the pair have visited key customers, seeking to reassure them that the transition would not disrupt long-term development. “The common question was, ‘Warren, you’re only 52, why are you retiring, you lightweight? Get back to work’,” says the 45-year-old Mr Segars, several years younger than anyone else on the board. “ ‘And Simon, we’re expecting business as usual fromArm.’ ”

Business as usual would be no bad thing. Arm’s pre-tax profits have tripled in the past five years, reaching £277m in 2012, as chipmakers use its designs to power smartphone brands from Apple to Huawei. Revenues from licences and royalties totalled £577m in 2012, up from £492m in 2011. Already sitting on more than £560m in cash, the company will continue to receive royalties on past designs for years to come: the Arm7 on which Mr Segars worked still accounts for a third of all Arm processors shipped.

The straight-talking Mr Segars joined Arm in 1991, then housed in a Cambridgeshire barn, three years before Mr East. His first sight on arrival was his manager soldering together a computer for him to use. The company had only a handful of contracts; there was no guarantee it would make it. Indeed, that was the attraction.

“There was a real connection between coming to work and doing something and the company staying in business,” recalls Mr Segars, who had previously been underwhelmed by his experience working in a large company, Standard Telephones and Cables.

The CV

● Born:October 17 1967, in Basildon, Essex
● Education: MSc in Computer Science at University of Manchester; BEng in Electronic Engineering at Sussex university
● Career: 1991 Leaves Standard Telephones and Cables to join Arm, becoming its 16th employee. Leads the development of Arm7 and Arm9 processor families. 
● 2004 Takes charge of Arm’s worldwide sales operations, joining the board a year later.
● 2007 Becomes head of the company’s physical intellectual property division. Moves to the US.
● March 2013 Appointed chief executive-designate, as Warren East announces retirement.
● July 2013 Starts as chief executive.
● Interests: Sports, photography.
● Family: Married with three children.

These days, Arm faces an increasingly sophisticated assault from Intel, its primary rival in the design of chip processors for mobile phones and tablets. Although Arm’s designs require less power, the US company is catching up, and recently won a contract tosupply the latest model of Samsung’s Galaxy tablet.

“It’d be almost inconceivable if they didn’t get some market share [in mobile devices],” Mr Segars says of Intel. “It’s kind of what we expected.”

Likewise, he does not express much concern about the PC market, where Arm has struggled to compete with Intel’s higher-performance designs. Although the latest Windows operating system now supports Arm processors, performance is “not so great”, according to the chairman of Acer, Taiwanese PC-maker.

“It’s not an area I spend a lot of time thinking about,” says Mr Segars. “PCs are declining. People prefer to access the internet using phones and tablets.”

The new chief executive’s pulse beats a little faster when the conversation turns to how new devices will use Arm’s technology. One opportunity that excites him is low-cost smartphones. “Some of them are quite phenomenal,” he says.

Another focus is the so-called internet of things – connectivity of devices from cars to kettles, creating a potential market for billions of low-power, low-cost processors.

Mr East once described himself as a Luddite when it came to gadgets. Does Mr Segars embrace innovations like Google’s self-driving cars? “Absolutely, why not. Roads are incredibly inefficient,” he says. “I know a lot of people enjoy driving cars . . . but I’ve got much better things I could do on my commute.”

Such applications could redefine Arm: today mobiles account for half of Arm processors shipped; by 2020 the company expects it will be about a quarter.

He does, however, dismiss some of the hype surrounding the internet of things. “The refrigerator that’s going to tell you when the milk’s about to go off – people have been talking about that forever and whether it ever happens or not, I don’t know.”

Unlike Mr East, who joined Arm because he didn’t want to move to the US, Mr Segars has three times moved across the Atlantic, where the press occasionally refer to Arm as “a small British company”. He shuttles between Cambridge and California, where he lives with his family, although they plan to move back in two years.

But there is little sign that he has been caught up in the Silicon Valley bubble. He raises an eyebrow, for example, at a recent attempt by Californian legislators to raise business taxes retrospectively, and is reluctant to say its infrastructure is any better than the UK’s.

“In California, you can be driving along and the call drops. You get fantastic phone coverage in Korea – it’s notable how much longer the battery in your phone lasts, because the cellular coverage is better – but you can sit in a traffic jam for ages.”

That unromanticised take on the US and fast-growing Asia means that Cambridge will remain the company’s headquarters – home to about 40 per cent of Arm’s employees.

Its location at a business park is “bursting at the seams”. The company is exploring options to expand.

Arm is taking part in a push to foster more electronics companies in the UK, though Mr Segars declares himself modestly optimistic about the future of UK hardware. “It’s a culture that definitely needs nurturing a bit,” he says. “There’s no reason why there can’t be other big UK technology companies.”

Other chief executives, such as Apple’s Tim Cook and Tesco’s Philip Clarke, have also assumed control of a well-performing company, only to find themselves in the eye of the storm. Is Mr Segars prepared for a similar predicament?

“From the outside, you can look at the company and say the guy’s taken over a glorious [company] and if it goes wrong he must have screwed up. There are a million things going on at any one time,” says Mr Segars.

“I have the benefit of having been here through all the ups and downs of Arm. Like most people in this kind of job, I have a healthy paranoid view of what could go wrong.”

If anything does go wrong at that unglamorous business park outside Cambridge, the only cause that can be safely ruled out is hubris.