Softbank's €32bn purchase of Arm in 2016 has been deplored by many players in the UK tech industry. While politicians tried to present the deal as a test of the UK's industrial prowess and proof that Brexit was not the doomsday scenario many feared, others felt the country's best chance of creating a giant local international technology had been lost. The fact that Brexit weakened the pound and therefore made ARM an easier target added insult to injury. On a positive note, Softbank is committed to not only keeping ARM research and development in Cambridge, but also expanding the workforce. Softbank's motivation for this deal was the belief that ARM technology would be essential in powering the Internet of Things (IoT). Four years later, things are a little different. Softbank is under pressure after a series of failed investments, including WeWork, and has used sales of more blue chip shares to help lighten the balance sheet.
Softbank and ARM
It is believed that ARM could be next, with Softbank either relaunching the company or selling it. This has led to speculation that Nvidia might be interested, a move that would be controversial given that ARM's business model is based on licensing its designs to any vendor. In theory, Nvidia would have the potential to adjust technical roadmaps to its own needs, potentially strengthening its portfolio. However, favoring one organization over another would be to the detriment of Arm's other customers. While there's no denying that Nvidia can afford the announced €35 billion price tag, it's suggested that Arm's value would drop immediately if it fell into the hands of a vendor. Neither party has commented on the rumors, but some analysts are skeptical about the logic behind such an acquisition. Either way, the transaction would struggle to gain regulatory approval and could take years to resolve, destabilizing the entire Arm ecosystem. A separate report claimed that Apple had been contacted to discuss a possible acquisition, but was not interested. Geoff Blaber of CCS Insight says that the value of Arm is in its independence and that any move by Nvidia could lead other vendors to look for an alternative, such as open source RISC-V "Actually, Arm is a licensing company," he explained. “While this could put Nvidia in a powerful position of control, $35.000 billion would be a high price to pay, and the licenses alone offer little synergy. Nvidia could license Arm technology and build its own processor cores, or come together to do so without acquiring Arm. “A lot of stories have been written about whether or not Nvidia should acquire Arm. I strongly believe that such a move would be detrimental to Arm and its ecosystem, and would not be good news for the industry if it is allowed to continue. "
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(Image credit: GTC)
A possible float?
Hermann Hauser co-founded Arm in 1990, and he, too, has reservations about the deal. He told the BBC that he was increasingly concerned about the possibility of such an acquisition and that if Arm fell into the hands of Nvidia it would be a "disaster". Hauser also opposed the sale to Softbank, but says at least the Japanese firm has kept its commitment to invest in Cambridge. He fears that with Nvidia, the decisions will be made in the United States and that other chipmakers are looking for an alternative to Arm technology. His preference would be for Arm to become a UK-owned company again and he believes the government would do well to facilitate such a deal. While Hauser admits that current circumstances mean public money is at a premium, he cites a willingness to invest in OneWeb as evidence that the government would step in if there was a strategic incentive. While the vast majority of the mobile industry would be more concerned with the ecosystem and supply chain than strengthening the UK's position as a chip powerhouse, an initial public offering might be the best path. to follow. "The alternative, and by far the best, is for Arm to return to public ownership," Blaber concluded. “This would ensure its continued independence and that the company would retain a management team that understands its value and priorities. Despite the speculation, I am optimistic that this is the most likely option. Hopefully SoftBank will eventually continue down the path of the Arm IPO. via BBC