Cambridge-based chip designer ARM has become one of Britain’s most successful tech companies by staying strictly independent. The firm supplies blueprints for 90% of the world’s mobile chips, yet unlike competitors AMD and Intel, refuses to compete with the companies that use its designs.
But with ARM set to be acquired by NVIDIA in a $40bn deal, the firm’s neutral status as what co-founder Hermann Hauser calls “the Switzerland of the semiconductor industry” is under threat.
Under the ownership of NVIDIA, ARM will form part of a new AI research centre in Cambridge, home to a “state-of-the-art AI supercomputer” powered by ARM CPUs:
“AI is the most powerful technology force of our time and has launched a new wave of computing,” said NVIDIA founder and CEO Jensen Huang in a statement on the deal. “In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people.”
Some suspect however, that in preparing for the new age of AI, NVIDIA will overturn the collaborative ecosystem that ARM has built around itself. While Huang has said he is keen to maintain ARM’s neutrality, the acquisition will indirectly put Nvidia in control of ARM’s designs – much to the dismay of tech firms concerned that NVIDIA will now be the first in line for fresh innovation.
The move away from Japanese-owned SoftBank to US ownership is also likely to be unpopular with China, which relies heavily on ARM chip architecture for its fledgling chip industry.
Since NVIDIA got the nod from China to proceed with its Mellanox acquisition in April, trade war tensions have escalated, with Trump’s sanctions blocking the development of chips by Huawei and other local chipmakers.
This makes it more likely that we could see a repeat episode of the July 2018 deal between chip giants Qualcomm and NXP, which was blocked by China amidst heightened geopolitical tensions.
Mathew Byatt, Managing Partner and Semiconductor Practice Lead at Acuity Advisors comments:
“Regardless of the positive rhetoric about maintaining its neutrality, NVIDIA’s proposed acquisition of ARM does pollute ARM’s independence. There are of course a limited number of examples where companies have maintained a degree of independence – Samsung Electronics is the posterchild. However, this is a hard balancing act for ARM and I doubt that the strength of the ARM architecture is sufficient these days to overcome the industry’s concerns when other compelling alternatives such as RISC-V are now available.”
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