Chip IP and tech firm Arteris jumped in its market debut; CEO Charles Janac joined Yahoo Finance to discuss company prospects and the ongoing global chip shortage.
SEANA SMITH: Auto chip maker Arteris making its public debut on the NASDAQ today with shares surging on the first day of trading as a public company closing up. You can see it on a screen about 30%. We want to bring in Charlie Janac. He's the president and CEO of Arteris. We also have our reporter, Pras Subramanian joining the conversation. Charlie, first of all, congratulations. I know it's a huge day for your company. The shares spiking in his public debut after pricing at the low end of expectations, what's your big takeaway from the first day as a public company?
CHARLES JANAC: Well, first of all, thank you for having me on the show. I would have to say that we're very, very pleased with going-- you know, having that kind of a reception in the market. So we're very, very pleased. But, you know, what matters is the long term. What matters is how we service our customers and their design wins and the SoCs they have underway and how we deliver the new products against those requirements. So it's a great start, but there's just a big starting point, not-- it's a great milestone.
PRAS SUBRAMANIAN: Hey, Charlie, congrats again on today's market debut. So tell us a bit more about what Arteris does exactly. We know that you guys work in the, maybe in the auto chip space, but how did-- what do you guys do exactly with your designs and things like that?
CHARLES JANAC: Yeah, so we're a semiconductor IP company. So we live in the same space as Arm, CEVA, and Alphawave, and those kinds of companies. What we do is system IP, that's the IP category that allows the chip to communicate. And we are essentially a pioneer in using networking techniques for on-chip communication. So we're a networking company. Like Cisco would be a company of macro networking. We make networks that operate inside semiconductor chips and between semiconductor dies.
PRAS SUBRAMANIAN: So you guys--
CHARLES JANAC: And we also make some software that packages, the packages IP blocks to link to the network on chip.
PRAS SUBRAMANIAN: Right. So you guys make a more advanced chip that I believe you use for stuff like ADAS and autonomous vehicle technology. We're facing now kind of like a big chip shortage with the auto industry, a lot of Ford today, GM today all talking about chip shortages. From your point of view, what is happening exactly in the auto space? Why are they having such a problem with these chips and getting them?
CHARLES JANAC: Because all the trends that we've been talking about on the road show are coming home to roost. There is just a lot more companies building chips. The system houses are building chips. The car companies are building chips. The tier ones are building chips. The ridesharing companies are building chips. And, essentially, there's not enough fab capacity. So the fabs are running flat out. But we need more fabs. And there's now a big scramble in China. in the US, in the EU, and even in Japan to build more leading-edge fabs to regionalize semiconductor production. And that's going to come on stream in the next couple of years. And the shortage will be handled by just there being many more fabs available.
SEANA SMITH: Charlie, Tesla has been able to navigate this pretty well. And I know they've made some adjustments. But from your perspective, what can other automakers learn from Tesla? Why haven't they been as affected as some of their competitors out there?
CHARLES JANAC: In my opinion, Tesla is not-- not necessarily a car company. It's an internet of cars company. And so they control their software architecture very well. And so one is they make some of their own chips. That's been publicly announced, a partnership with Samsung. But even for the chips that they buy, they're able to get their software teams to reprogram some of the software for chips that are available. So they're a little bit more nimble because they control their own software architecture.
PRAS SUBRAMANIAN: Hey Charlie, what do you-- what can Arteris do do, you think, at least in this country, to actually alleviate that chip shortage? Are you guys able to kind of help other companies pump out more chips, more foundries and things like that?
CHARLES JANAC: So we're not on the manufacturing it. What we can do, though, is make the process of SoC creation much more productive. You know, before Arteris started existing, it took people tens of days to make a chip interconnect. With our [INAUDIBLE], they can do it in days. And, you know, now, in the future, we need to get it so that we can do it in hours. And so we want to accelerate the creation of SoC-type semiconductors and enable more complex SoCs to be built.
PRAS SUBRAMANIAN: So Charlie talking about accelerating chip making, your guys' business plan sort of is leveraged to the expansion of autonomous driving from level 1 to level 5 in this country. How confident are you that level 5 autonomous driving is going to be here in the near or the not too distant future?
CHARLES JANAC: OK, that's a great question. OK, so the highway scenario is absolutely practical and extremely useful. The secondary highway scenario, I think, is absolutely workable with stoplights, multi-lane highways. When you come to inner city scenarios, which are extremely complex. I think those scenarios are viable in a geofence-type environments. But I think it'll be many, many years before we have full level 5 in a sort of an unconstrained environment. But already, there are some environments which are geofence where level 5 is practical. But you really have to eliminate some of the complexity that you get in inner cities. So level 5, absolutely on the highway, inner cities, many years.
SEANA SMITH: What about getting people on board and trusting autonomous vehicles? Because Charlie, you're in the industry. You probably have a lot of trust for something like this, the technology behind it. I know Pras is a huge car guy. He knows a lot more about this than I do. But I'm someone that would be a little bit nervous getting into an autonomous vehicle. What do you have to say about that?
CHARLES JANAC: I think it depends on the scenario. If you're at an airport and you're going from a parking lot to the terminal, would I get on an automated vehicle, absolutely? Would I get on a fully automated vehicle in downtown Shanghai? Maybe not. It just depends where that automated vehicle is operating. But eventually, it'll happen. It's just that those complex scenarios will take longer than people anticipated. But the simple scenarios are really very close to being vital and to being very valuable.
SEANA SMITH: Charlie Janac, great to speak with you, President and CEO of Arteris. Arteris making its public debut today on the NASDAQ, with shares soaring 30% on day one. So Charlie, congratulations again. And, of course, our thanks to Pras Subramanian as well.