Qualcomm offers to invest in Arm as regulators threaten Nvidia deal

Cristiano Amon, President of Qualcomm and Qualcomm CDMA Technologies, answers a question during a panel discussion on 5G wireless broadband technology during CES 2018 in Las Vegas, Nevada, USA on January 10, 2018.

Steve Marcus | Reuters

US chip giant Qualcomm has said it is open to the idea of ​​investing in British chip designer Arm if regulators block the company’s $ 40 billion sale to Nvidia, according to a report by The Telegraph newspaper on Sunday.

Qualcomm’s incoming CEO Cristiano Amon reportedly said Qualcomm would be willing to buy a stake in Arm along with other industry investors if SoftBank, the current owner of Arm, listed the company on the stock exchange instead of selling it. to Nvidia.

“If Arm has an independent future, I think it will find a lot of interest from many of the companies within the ecosystem, including Qualcomm, to invest in Arm,” Amon said, according to The Telegraph. “If you move out of SoftBank and go into the process of becoming a publicly traded company, [with] a consortium of companies that invest, including many of their clients, I think those are great possibilities. “

Amon reportedly added that Qualcomm “would definitely be open to it” and that the company has “had conversations with other companies that feel the same.”

Qualcomm declined to comment when contacted by CNBC, while Nvidia said an IPO would not be enough to support Arm’s growth. Arm did not respond immediately.

Arm was born from an early computing company called Acorn Computers in 1990. The company’s energy-efficient chip architectures are used in 95% of the world’s smartphones and 95% of Chinese-designed chips. The company licenses its chip designs to more than 500 companies that use them to make their own chips.

An Nvidia spokesperson told CNBC that Arm needed more than an initial public offering to reach its full potential.

“Arm needs an infusion of new technology that it can provide to Arm licensees everywhere, so we stepped up and agreed to buy Arm,” they said. “Our technologies and those of Qualcomm are very complementary; We would appreciate Qualcomm’s help in creating new technologies and products for the entire Arm ecosystem. “

Nvidia’s acquisition of Arm was announced by the companies last September and was expected to take around 18 months to complete. Since then, Qualcomm has been telling regulators around the world that it is against the deal, as have Microsoft and Google, according to Bloomberg.

The companies say they oppose the acquisition because there is a risk that Nvidia will become a guardian of Arm’s technology and prevent other chipmakers from using the company’s intellectual property. They question whether Nvidia will be able to fully capitalize on the acquisition without blocking access to Arm’s chip designs.

Nvidia has repeatedly said that it will keep Arm’s open license model and invest heavily in Arm’s headquarters in Cambridge, UK.

But the Federal Trade Commission, the European Commission, the UK Competition and Markets Authority and China’s State Administration for Market Regulation are investigating the deal.

Arm has a joint venture called “Arm China” with Chinese private equity firm Hopu Investments. Arm China is based in Shanghai, which means that the Chinese Ministry of Commerce and the State Administration of Market Regulation of China have the right to review the agreement.

Nvidia has asked Chinese regulators to approve the deal in recent weeks, according to a report by The Financial Times earlier this month citing sources familiar with the matter. Nvidia said the regulatory process was confidential, but is confident that it will receive approval and “will close in early 2022.”

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