San Diego, CA-based chip manufacturing giant Qualcomm is interested in owning a piece of SoftBank’s British semiconductor IP design company Arm through an industry consortium made up of competitors. The idea is to keep the company independent of anyone with controlling power.
The Arm acquisition saga just got its latest twist with another American chipmaker, Qualcomm, vying to take over the British semiconductor design company. According to a report from the Financial Times, Qualcomm wants to buy a significant stake in the SoftBank-owned company that holds immense strategic value in the semiconductor industry.
“We’re an interested party in investing,†Cristiano Amon, Qualcomm’s chief executive, told the Financial Times. “It’s a very important asset and it’s an asset which is going to be essential to the development of our industry.â€
Arm designs energy-efficient chips primarily for consumer electronic devices such as smartphones, tablets, multimedia players, smart TVs, Wi-Fi routers, printers, control systems, cameras, IoT devices, etc. Arm’s technology also powers a wide range of devices and systems, from washing machines to large-scale data centers.
Arm’s importance becomes even more apparent considering Apple may shed Intel x86-based processors for ARM’s RISC processors for its upcoming line of Mac computers. At Build 2022, Microsoft also announced Project Volterra, the company’s first developer kit for ARM desktop PCs.
This is why NVIDIA’s planned $40 billion acquisition of Arm was met with industry-wide concerns, not to mention regulatory scrutiny by the U.K, EU and U.S.-based watchdogs. The Federal Trade Commission even sued to kill the deal that NVIDIA’s competitors, including Qualcomm, and regulatory agencies believed would reduce competition and stifle innovation.
Concerns mounted over where NVIDIA, after acquiring Arm, would focus research and development on the latter’s widely used chip architecture and intellectual properties, which almost all chipmakers rely on.
As a result, the acquisition plans were shelved, with Arm set to head for its initial public offering (IPO) before March 2023. This made it clear that Arm is far too valued to be handed over to any of the semiconductor players in the market.
Qualcomm is attempting a take over through a consortium of chipmakers that is diverse enough to ensure Arm’s independence. Amon added, “You’d need to have many companies participating so they have a net effect that Arm is independent.â€
Qualcomm, which opposed the NVIDIA-Arm deal, is thus interested in owning a majority share in Arm in partnership with its competitors, who also happen to be Arm’s customers. This way, the consortium can safeguard the business interests of its members by ensuring that access to Arm’s technology isn’t restricted while R&D activities continue.
It is hard to tell if a stakeholder-driven consortium would be ideal for Arm, whose existence is essential for the ~$500 billionOpens a new window semiconductor industry. But at this time, it seems like a safe bet. To wit: the most important aspect of the consortium is neutrality over Arm and whether or not Qualcomm or any other member would have controlling power over the company.
In April, SoftBank said it plans to hold on to controlling shares in Arm even after the IPO. Arm was acquired by Japan’s SoftBank in 2016 for $31.4 billion.
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