Page 51 - EE Times Europe November 2021 final

EE|Times EUROPE 51

OPINION | MERGERS & ACQUISITIONS
Nigel Toon telling The Financial Times the
Nvidia-ARM: deal would be “bad for competition, bad for
the market overall, and bad for Britain.”
Cristiano Amon, CEO of Qualcomm (an
Where Do We Stand? ARM customer and Nvidia competitor), has
openly questioned the potential neutrality
of an Nvidia-owned ARM. Other concerns
have come from Samsung and Apple. Google
By Sally Ward-Foxton and Microsoft, potential adopters of the
ARM architecture in the data center, are also
reportedly against the deal.
How is the biggest semiconductor acquisition in history going On the other hand, ARM customers
so far, and what might happen next? Broadcom, MediaTek, and Marvell have pub-
The potential Nvidia-ARM acquisition has been in the news this licly expressed support for the acquisition.
fall, with Nvidia offering the EU concessions that court its approval What’s next? The U.S. Federal Trade Com-
for the deal. Worth US$40 billion, the deal to buy ARM from Japan’s mission and China’s State Administration for
SoftBank will be the biggest the semiconductor industry has ever Market Regulation are both scrutinizing the
seen — if it goes through. deal. The Financial Times has reported that
This article was written as Nvidia was awaiting the EU’s decision, Nvidia submitted an application to Chinese
due by Oct. 27. At the time of writing, the European Commission was regulators sometime in the second quarter but
still seeking feedback from competitors and customers of the two businesses. Its options are to that the review could take 12 to 18 months.
accept the concessions, demand more concessions, or open a four-month investigation, with the An 18-month review process would put the
investigation seeming most likely. We don’t know what Nvidia has proposed in its bid to get the acquisition outside Nvidia’s extended target
EU’s blessing; such details are normally kept secret ahead of an announced decision. for closing the deal, which is September 2022.
ARM is broadly regarded as a jewel in the U.K. technology crown. Earlier this year, Hermann Will the Chinese ultimately approve the
Hauser — a founder of Acorn Computers, which spun out ARM — voiced concern over the transaction? Chinese customers account for a
acquisition, saying he was worried that ARM’s headquarters might be moved to the U.S. significant portion of ARM’s sales, and some
Nvidia has since repeated its commitment to maintaining ARM’s headquarters in the U.K. In a may have concerns about handing control
further show of commitment to the U.K. tech industry, Nvidia has announced plans to build a of ARM to a U.S.-based company as trade
US$100 million supercomputer in Cambridge (separate from ARM). The supercomputer will tensions persist between the two countries.
support British pharmaceutical giants GSK and AstraZeneca as well as cutting-edge research by And if ARM headquarters moved to the U.S.
NHS organizations. (despite Nvidia’s assurances to the contrary),
Nevertheless, the Nvidia-ARM deal is also under scrutiny from the U.K. government’s ARM would be subject to U.S. law — and thus,
Competition and Markets Authority (CMA). Phase 1 of the CMA’s investigation was prompted by potentially, to controls on sales to certain
unspecified “national security fears.” This phase kicked off in April and asked for comments from customers in China.
competitors and customers; the report noted complaints from ARM customers who compete Let’s not forget that in 2018, it was
with Nvidia and are concerned that Nvidia could restrict access to ARM’s cores to further its own the Chinese regulators who nixed the
position. Nvidia has offered “behavioral remedies” to ensure that rivals can access ARM’s IP, Qualcomm-NXP deal, which at the time was
but the CMA said the proposal did not alleviate its concerns. It therefore launched Phase 2, an the biggest proposed acquisition in semicon-
in-depth probe that began in August. ductor history. Could history repeat itself?
There are many vocal critics who do not want ARM in Nvidia’s hands. British semiconductor Nvidia’s target to close the deal is March
unicorn Graphcore, a direct competitor of Nvidia, is in the “against” camp, with Graphcore CEO 2022, with a possible extension to
September 2022. If the deal falls through,
ARM has several options, assuming
SoftBank still wants to recoup its investment.
One would be an IPO: ARM could list on the
London Stock Exchange. Another option,
proposed by Qualcomm’s Amon, would be for
an industry consortium to buy ARM in order
to keep it neutral. Right now, that avenue
seems a little far-fetched.
ARM’s future rests on decisions from reg-
ulators in the EU, U.K., and China — and on
those decisions being made before
September 2022. Citigroup analysts have
raised their estimation of whether the
deal will go through to 30% following the
statements of support from the ARM cus-
tomers mentioned above. Chinese regulatory
approval remains the biggest hurdle, and
September 2022 does not seem that far away. ■

(Source: ARM) Sally Ward-Foxton is editor-in-chief of
EE Times Weekend.

www.eetimes.eu | NOVEMBER 2021