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When life gets a little dull in the mobile markets, there are always some favorite rumors to resurrect. One of those is that Apple will acquire ARM, the dominant provider of processor intellectual property in mobile devices. This was doing the rounds again yesterday, sparking an 8% surge in ARM's stock price, but very little real credibility.

Belief in Apple's interest in ARM presumably arose from its recent activities in creating its own processor design, the A4, based on its 2008 acquisition of PA Semi. The A4 appeared in the iPad and interest in unlikely firms getting into silicon was then boosted further, when Google bought start-up Agnilux, formed by refugees from Apple/PA Semi. Apple has other processor interests too, notably its stake in Imagination Technologies, its key supplier of IP for graphics cores. And of course, it has shared history with ARM, which was originally formed as a joint venture between Apple, Acorn and VLSI, to develop the Acorn Risc chip.

However, whenever ARM is touted as an acquisition target, the sense behind any deal quickly falls apart. The company's success lies in the fact that it licenses its IP to the makers of over 90% of the world's mobile devices, and its growth will come from extending that business model to new device categories, to graphics and other related processor technologies, and possibly even to PCs and servers. In all respects, it is increasingly in a head-to-head with the other dominant processor architecture, Intel's x86. But the power of ARM lies in the fact that it is vendor neutral, with its customers licensing its designs - gaining scale and a unified software base, but able to create highly differentiated processors on top of the ARM foundations. The few firms that have full architecture licenses, notably Qualcomm, Apple and Marvell, can go much further in this respect.

An architecture license is a major investment, but it brings genuine ability to leapfrog competitors in processor design, and the apps processor is becoming the heart of the mobile device in these data-driven days. Owning the entire IP has far fewer attractions, because it immediately kills the vendor neutral business model on which ARM's success depends. There would be some incentive for Intel, to mess up its competition, though antitrust law would scarcely allow it (Intel dumped its own ARM activities to focus only on x86 when its sold its XScale unit to Marvell). For everyone else, the joys of derailing rivals' processor or device roadmaps would be quickly outweighed by the need to compete single-handed with x86 and shrink ARM's target market down to the vendor's own requirements, plus a few non-competitive partners that might still license the architecture once current contracts expired.

Some analysts said Apple would like to own the ARM technology and keep it out of rival gadgets, but that misses the point - it is not the basic ARM core itself that makes a product stand out, but the way this is implemented within an advanced processor, which A4 appears to be. More sensible comment came from the sceptics, such as Janardan Menon of Liberum Capital in London, who told EETimes a deal would be "quite incredible. I don't see what Apple would get out of this. Apple has a strategy to design its own chips, but only for application processors, and it can do that with ARM intellectual property. It doesn't need to buy the company. The only reason for Apple to buy ARM is deny the technology to other IP licensors. But Apple can buy an architectural license, change the architecture as much as they want to develop a differentiated product."

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