The US chip manufacturer Qualcomm wants to take a stake in Arm together with its competitors and set up a consortium that would maintain the neutrality of the British chip designer in the highly competitive semiconductor market.
Japanese conglomerate SoftBank plans to list Arm on the New York Stock Exchange after its $66 billion buyout of Nvidia collapsed earlier this year. However, the IPO has raised concerns about the company’s future ownership given its pivotal role in the global tech sector.
“We are interested in investing,” Qualcomm chief executive Cristiano Amon told the Financial Times. “It is a very important asset and an asset that will be critical to the development of our industry.”
He added that Qualcomm, one of Arm’s biggest customers, could join forces with other chipmakers to buy Arm outright if the consortium making the purchase is “big enough.” Such a move could allay concerns about Arm’s corporate control after the upcoming IPO.
“A lot of companies would have to participate to have the effect of Arm being independent,” he said.
Arm, which was founded and is headquartered in the UK, was listed in London and New York before SoftBank acquired it for £24.6bn in 2016, despite widespread concerns that Britain’s most successful tech company could fall into foreign hands.
Some British politicians have called on the government to buy a “golden share” of Arm, which would recognize the company’s position as a key strategic asset for the nation.
But despite intense British lobbying, SoftBank is believed to be pushing for a US listing, prompting questions about future control of a company that has long been the “Switzerland” of the world’s $500 billion semiconductor industry. Arm pursues licensing deals with partners regardless of size or geography, which has resulted in its intellectual property being used in most chips sold around the world.
Amon’s intervention will give fresh impetus to the idea of a syndicate of chipmakers becoming the cornerstone of arm investors. Intel CEO Pat Gelsinger suggested the US chipmaker could support such a move earlier this year.
Qualcomm had opposed Nvidia’s planned acquisition of Arm, claiming that it made no sense for a chipmaker to take control of a company that is fundamental to the entire sector.
“Arm won everywhere because of the collective investment of the entire ecosystem, from companies like Apple and Qualcomm and many others, and that’s because it was an independent, open architecture that anyone could invest in,” Amon said, referring to the time before that SoftBank bought the company.
As demand for semiconductors doubles over the next 10 years and the world struggles to recover from a multi-year chip crisis, makers of the technology found throughout modern electronics will focus on the designs more than ever left by arm.
Recommended
“If we look today, I think the trend is that everything is shifting to arm,” Amon said, citing the chip IP designer’s recent expansion beyond cellphones into cars, the Internet of Things and data centers.
After several years of poor returns, Arm reported record annual sales of $2.7 billion in 2021, up 35 percent from the previous year. Licensing revenue rose nearly two-thirds, and royalties rose a fifth to $1.5 billion.
Amon said Qualcomm hasn’t spoken to SoftBank about a potential investment in Arm. He added that the Japanese group has prioritized resolving an impasse at Arm’s breakaway Chinese entity.
Allen Wu, Arm China’s CEO, had effective control of the entity but has fallen out with its UK-based parent company as well as SoftBank.
However, recent official Chinese records showed that Wu was removed from all his roles at Arm China, paving the way for Arm’s IPO.
Investing in Arm alongside peers would “support a successful IPO and valuation” and ensure the company “continues to strive and invest,” Amon said.
Comments are closed.