Advanced Computing in the Age of AI | Thursday, October 21, 2021

Incoming Qualcomm CEO Says He May Have a Better Idea About Nvidia’s Proposed Acquisition of Arm 

Nvidia may have announced its blockbuster $40 billion acquisition plans for chip IP vendor Arm back in September 2020, but now the incoming CEO of chip vendor Qualcomm is busy touting an alternative plan for Arm’s future, according to a June 13 report from The (London) Telegraph.

Instead of proceeding with the potential Nvidia acquisition, Cristiano Amon, who is scheduled to take over as Qualcomm’s CEO on June 30, says that a better plan for Arm would be for Arm owner SoftBank to “float” the company and seek investments from a consortium of companies, including Qualcomm, that are interested in its success, the report continued.

Amon’s idea is particularly intriguing because the acquisition of Arm by Nvidia is not a slam dunk at this point. U.S., U.K. and Chinese regulators are still reviewing the proposal and vocal opposition to the deal has been coming from other tech companies including Qualcomm, Microsoft and Google.

His investment idea could only likely happen if the Nvidia acquisition plans are eventually nixed by regulators, or if Arm would somehow open its ears to such an alternative plan.

“If Arm has an independent future, I think you will find there is a lot of interest from a lot of the companies within the ecosystem, including Qualcomm, to invest in Arm,” Amon told The Telegraph. “If it moves out of SoftBank and it goes into a process of becoming a publicly-traded company, [with] a consortium of companies that invest, including many of its customers, I think those are great possibilities. We will definitely be open to it, and we have had discussions with other companies that feel the same way.”

Arm was put on the market last year by SoftBank as that company looked to shed assets and raise needed cash.

Christiano Amon of Qualcomm

Amon, 50, who is currently the president of Qualcomm, has worked for the company since 1995 when he worked there as an engineer. He has been responsible since 2018 for Qualcomm’s semiconductor business, its global operations and he has driven the expansion and diversification of the business across industries and customers, according to the company.

If approved by regulators, the Nvidia deal for Arm would bring together Nvidia’s graphics chips and AI computing platform with Arm’s intellectual property for popular computer and mobile chips and technologies in what the companies hope will be a combined ecosystem to lead in the fields of AI and computing.

Softbank bought Arm only five years ago in July of 2016 in a $32.25 billion all-cash deal, but the Japanese technology investment company has hemorrhaged cash since the first quarter of 2020 and has been looking to sell off assets to raise money. SoftBank’s financial problems arose as earlier bets on the rise of connected devices have failed to pay off. The company’s Vision Fund, its AI investment fund, reportedly suffered a $13 billion annual loss in its fiscal year ending in March 2020.

Acquiring Arm would solidify Nvidia’s standing as a major player in wireless and other markets as it makes steady inroads in enterprise data centers. The graphics leader has released a stream of ever-more powerful GPUs targeting machine learning and other AI workloads that now dominate corporate data centers.

Opponents of the deal, however, including Amon and Qualcomm, see that concentration of power by Nvidia as potential harmful to the marketplace.

“That’s the reason it’s a logical conclusion for us, and for many other companies, that to invest in a strong and independent Arm is probably the best for everyone,” Amon told The Telegraph.

Not So Fast, Says Nvidia

In a statement to EnterpriseAI, Nvidia said that simply bringing in new investments for Arm from a group of varied suitors would not help the company truly thrive.

“To grow and meet the demands of the AI era, Arm needs much more than an IPO,” said Nvidia’s statement. “Arm needs an infusion of new technology that it can provide to Arm licensees everywhere, which is why we stepped up and agreed to buy Arm. Our technologies and Qualcomm’s are highly complementary -- we would welcome Qualcomm’s help in creating new technologies and products for the entire Arm ecosystem.”

Meanwhile, a statement from a spokesman at Arm said the Nvidia acquisition continues to be the best course for the company.

“We are extremely confident regulators worldwide will approve Nvidia’s acquisition of Arm,” the spokesman said. “The combination of Arm and Nvidia will enable a stronger pipeline of advanced technology to support the ecosystem, while advancing market competition in the age of AI.”

Qualcomm did not respond to several email requests from EnterpriseAI for additional comment on the matter.

IT Analysts Weigh In

Several industry analysts told EnterpriseAI that Amon’s remarks to The Telegraph about the Nvidia-Arm deal should not be a surprise to anyone because he has been repeatedly voicing his displeasure about the move.

Daniel Newman, analyst

“Nvidia made a very good deal for themselves,” said Daniel Newman, the principal analyst and CEO of Futurum Research. “Acquiring Arm would be very good for Nvidia’s business. It gives them a chance to superpower what Arm is doing.”

The deal is also good for Arm, which is one of the most interesting technology companies in the marketplace today, he said. But other companies may not be so sure, he added.

“A lot of people who depend on Arm are not sure how the deal will affect them,” said Newman. “Nvidia says nothing changes for those companies. All the companies using Arm will have to wait and see what happens.”

For that reason, the idea of a possible IPO or a different route like Amon suggests could be a logical move, said Newman. “Probably seeing an alternate route [for a deal for Arm] may be a favorable outcome for some companies.”

Alex Norton, analyst

Amon has been with Qualcomm for many years and was the clear favorite to replace outgoing CEO Steve Mollenkopf, said Newman. “I don’t think that anything [Amon] said is harmful to Qualcomm. He is a very experienced guy. Qualcomm has been in public saying they are not supportive of this deal. I do not think he is doing anything more than furthering that message.”

Alex Norton, principal technology analyst and data analysis manager for HPC and emerging technologies with Hyperion Research, agrees.

“The Qualcomm comments make sense to me, especially given the potential implications of taking a company like Arm, which brings open source and collaborative efforts to the semiconductor industry, and making it solely owned by another chip vendor,” said Norton. “The potential upside of multiple companies owning Arm allows for more users to have input, include their own IP, and keep Arm available to more users. There is a concern that if the market consolidates around too few companies, it may hinder the potential future of the HPC market.”

Another analyst, Rob Enderle of Enderle Group, said that Amon’s comments are likely inspired because while Nvidia and Qualcomm are competitors, Qualcomm has a more significant financial tie to Arm than Nvidia has today.

Rob Enderle, analyst

“Generally, if you depend on technology, you will resist that technology being controlled or bought by a competitor,” said Enderle. “But this may be more about getting concessions in terms of limited Nvidia control and protection of Qualcomm’s interests than in halting the deal, which is not unusual in situations like this.”

The success of the Nvidia-Arm deal will likely come down to who has the best lobbyists, said Enderle. “Both Google and Microsoft have to vary strong lobbyists and can overmatch Nvidia if those two companies put those lobbyists in play.”

Enderle said he sees Nvidia having the edge in these scenarios at present. “So, while the risk of this [deal] not happening is increasing, at this moment, Nvidia is still more likely to succeed than to fail, and their [incoming] CEO is known for his ability to get things done that are very difficult.”

Roger Entner, analyst

Roger Entner, founder and principal analyst with Recon Analytics, has a more philosophical view.

“Arm is an ecosphere enabler that allows many companies to build chipsets,” said Entner. “The fear of many Arm customers is that if Nvidia owns Arm, that Arm is predominantly building for Nvidia and not them. Only a few years ago, the acquisition of Arm by Nvidia would have been approved without a problem. In the new platform world, with companies like Facebook and Google being accused of predatory acquisition, the parallel to this acquisition is hard to miss.”

In addition, Qualcomm’s Snapdragon SoCs are based on Arm core designs, which makes Arm a key supplier for Qualcomm’s chipsets, he said. “It is hard to predict how this all ends as Lina Khan has become the [chairwoman] of the Federal Trade Commission. An acquisition like this would be an early indicator of how hawkish the FTC will become when it comes to mergers and acquisitions.”

Another Chip Deal Offer in the News

Interestingly, another chipmaking giant, Intel, made its own takeover overture recently for SiFive Inc., a semiconductor design startup in San Mateo, Calif., according to a June 10 story by Bloomberg.

Intel offered more than $2 billion for the company, which is among several other offers coming in from multiple suitors, the story reported. The report said that the Intel talks are early and that SiFive could ultimately rebuff the offer.

SiFive, whose chip designs are based on RISC-V architecture, is a rival to Arm. Interest in SiFive has increased since Nvidia’s acquisition offer for Arm last year, the story reported.

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