Chip designer Arm risks backlash from Apple and Qualcomm over its $40 billion acquisition by Nvidia

Simon Segars Jensen Huang

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UK chip designer Arm risks a huge backlash from the firms who license its tech — including Apple and Qualcomm — if its $40 billion acquisition by Nvidia is cleared by regulators, an analyst has warned.

CCS Insight analyst Geoff Blaber said Arm’s diverse customer base, which also includes Huawei and Samsung, would oppose its takeover by a US chipmaker.

He said on Monday: “Independence is critical to the ongoing success of Arm and once that is compromised, its value will start to erode.

“This will rightly face huge opposition, most notably from Arm licensees who have collectively shipped an average of 22 billion chips annually over the last three years. A huge diversity of businesses from Apple to Qualcomm are dependent on Arm and will be motivated to unite in opposition.”

Nvidia announced Sunday that it would acquire Arm from its current Japanese owner SoftBank for $40 billion.

Arm, founded in the UK in 1990, is not as well known as other big chip firms, but its tech underpins much of the semiconductor industry. It doesn’t make chips itself, but licenses designs out to a wide range of firms, including Huawei, Apple, Qualcomm, and Samsung.

Reuters reported that Arm’s takeover by a US firm could deepen existing geopolitical tensions currently playing out with China.

“China is going to hate it,” one Chinese chip executive said, adding that US firms who create server chips based on Arm designs might have a harder time selling in China thanks to the new US parent firm.

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Arm’s chief executive Simon Segars and Nvidia founder Jensen Huang jointly insisted on Monday that the two firms will continue Arm’s licensing model.

Segars told reporters: “I’ve had dialogue with many of our customers as various rumors have swirled on. To me … it is really important Arm is able to maintain its business model, and the way we’ve operated, to continue to grow and to continue to serve the licensees who have been so loyal to us over the years. That’s really important.

“I know that, they know that, they that I know that. That was a really important part of the discussion we had between Arm and SoftBank and Nvidia.”

Huang added: “We will maintain open licensing and customer neutrality, serving customers in any industry across the world … We love Arm’s business model, and we intend to expand Arm’s licensing portfolio with access to Nvidia’s technology.”

Arm has also dismissed fears that its acquisition by Nvidia could expose it to heightened security scrutiny by the US government.

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Source:: Businessinsider – Tech

      

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