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6 August, 2020 - 10:57 By Tony Quested

Arm-wrestle hots up as tech giants flex muscles

Although Nvidia is said to be in advanced talks to acquire Cambridge superchip wizard Arm from SoftBank the vast waters between the US, Asia and the UK have been considerably muddied by speculation of other potential bidders.

Samsung is said to be circling along with a consortium of fabless semi-conductor companies keen on buying stakes in Arm depending on the prevailing state of play.

Just as you thought it was safe to come out, the names of Intel and Sony were added to the list of Arm-wrestling contenders as the week wore on. 

“What a great way for Intel to get one over on Apple after their chip fallout,” one respected US tech entrepreneur told Business Weekly. Apple is producing its own chips based on Arm IP.

Another tech vet told me: “Nvidia buying Arm would be so bad for Intel that it might revive their interest.”

However this pans out, regulatory authorities in the UK and US will have a tough job refereeing the terms of any deal because so many conflicting trade interests are intertwined.

Business Weekly’s wires have been hot in the last few days with tech company bosses firing over their own takes on who is in the running to buy Arm and why. 

It would take a small novelette to portray all the different angles of their views and sentiments so let’s stick with what we know.

Arm co-founder Hermann Hauser wants the UK government to intervene in any attempt to take the company into foreign ownership, arguing that it could deliver a potentially fatal blow to the UK technology sector.

Nvidia has the biggest war chest: It will at least cover the $32 billion SoftBank paid for Arm in 2016 but has the capacity to go to as high as $55bn if it needs to.

And that would seem to be the crux: It will only need to go high if rival bidders enter the ring. With Apple and Qualcomm no more than interested observers Samsung seems the most likely rival to Nvidia but at the time of going to Press, we were advised not to rule out Intel which has been keen to get rid of Arm from the Cambridge tech scene for some time. If you can’t beat it, buy it seems to be the rationale.

Then there is Sony. One respected observer wrote: “If Microsoft buys AMD, then Sony would be faced with a bad set of choices: put money in Microsoft’s pocket every time it sells a PlayStation, or try to create an entirely new platform by using technologies from Intel, Nvidia, Arm or Imagination Technologies (Chinese owned and Herts-based, of course).”

Samsung wants to buy a stake in Arm, between three and five per cent with  the remaining shares to be bought by a consortium of fabless semi-conductor companies, according to an insider. But SoftBank wants its money back from the Arm purchase – and then some – so selling off a number of small stakes won’t get it there.

Samsung’s goal is said to be to reduce the royalty payments for producing chipsets based on the ARM platform – the Cortex CPU and Mali GPU designs. 
Arm itself – if we could spare a thought for management and staff at this fabulous ‘once in a lifetime’ Cambridge business – would benefit most from a dual UK and US IPO. 

But that won’t get SoftBank cash quickly enough to save its own skin so don’t hold your breath on that one. Anyway, it is a pawn in SoftBank’s game dressed up as a king.

One more thing to consider: When SoftBank acquired Arm, the Takeover Panel insisted that it double Arm’s UK workforce in five years.

SoftBank is currently hundreds of heads short of that target. But, hey what do you know? Nvidia already has six offices in the UK – in Cambridge, London, Reading, Belfast, Bristol and Daresbury – so could apply that headcount to the Takeover Panel requirement.

Daresbury, incidentally, is the birthplace of Lewis Carroll who wrote Alice in Wonderland. Back down the rabbit hole then and watch out for the Mad Hatter!

• Image courtesy of Arm.

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