ARM CEO Insists Nvidia Purchase Better Than IPO

The chief executive of chip designer ARM Holdings has reacted to ongoing concerns about the acquisition by American GPU giant Nvidia.

In September 2020, after months of rumours, it was confirmed that Cambridge-based ARM, whose designs power 95 percent of the world’s smartphones, was to be sold to Nvidia for a hefty $40 billion (£28.5bn).

The acquisition was hugely controversial at the time, and opposed by one of ARM founders, Tudor Brown, as well as Hermann Hauser (involved in the development of the first ARM processor when it was part of Acorn).

Controversial sales

Both said the company should not be sold to a semiconductor firm, but should remain a neutral supplier to the industry.

The sale came after SoftBank had acquired ARM for $32bn in 2016, which had also prompted political concern in the UK at the time, with politicians urging the government to step in to ensure that ARM remained headquartered in Cambridge.

In January 2021 the UK competition regulator, the Competition and Markets Authority (CMA), confirmed it would investigate Nvidia’s acquisition of ARM Holdings.

But because of the global importance of ARM, in addition to the UK CMA probe, the European Commission and the US Federal Trade Commission (FTC) also launched their own probes into the matter.

China’s State Market Regulatory Administration is also investigating the proposed deal.

In February this year, it was reported that Nvidia’s proposed acquisition of ARM was also being opposed by tech giants such as Alphabet, Microsoft, and Qualcomm.

Google, Microsoft and Qualcomm all manufacturer their own inhouse processors, and depend upon ARM chip designs.

Then in April the British government involved itself when it issued a ‘public interest intervention notice’ over ARM’s sale, citing national security implications.

The CMA has until midnight at the end of 30 July 2021 to complete and submit a report to the UK government about the matter.

A final twist came last week, Qualcomm CEO Cristiano Amon told The Telegraph that Qualcomm was open to investing in an initial public offering by ARM if the Nvidia deal falls apart.

Amon also told media outlets that joint ownership of ARM by industry peers would keep the firm independent.

Defending the deal

But ARM’s CEO, Simon Segars, has strongly defended the deal, and said it was the best outcome for the British chip designer.

He made clear why he regards the ARM Nvidia deal as “good for everyone” in a blog post.

“Under our current owner, SoftBank, we have invested heavily in new chip technologies which allowed us to enter new markets such as 5G networks and cloud computing,” wrote Segars. “But that work was only a beginning and won’t be enough for us to fulfill our ambitions. To lead in AI, ARM will need to expand our scope, expand our business and invest in new technologies.”

“Nvidia is the perfect complement to ARM,” he wrote. “Combining our expertise with Nvidia’s AI leadership will give ARM’s UK-based engineers access to technology and resources that ARM alone would not have.”

“There’s been a lot of ill-informed speculation out there about what the future of ARM with Nvidia will look like,” he added. “Some believe that an initial public offering (IPO) would have been a better path. Others are concerned that ARM will leave the UK, while some have fears that ARM will become anti-competitive. These assumptions couldn’t be further from the truth and I’d like to address them head-on.”

“The combination of ARM and Nvidia is a better outcome than an IPO,” wrote Segars. “The level of investment that will be needed to lead in AI will be unprecedented. We’ve been down this road before when we predicted a major market shift in 2016.”

“Now is the time for us to take our scale to the next level to address the technology challenges ahead,” wrote Segars. “We contemplated an IPO but determined that the pressure to deliver short-term revenue growth and profitability would suffocate our ability to invest, expand, move fast and innovate.”

“Combining with Nvidia will give us the scale, resources and agility needed to maximize the opportunities ahead,” wrote Segars. “This deal is the best opportunity for ARM and our customers and will enable the UK to be a meaningful industry player in the age of AI.”

AI investment

Segars confirmed that ARM will remain headquartered in the UK and will be able to increase its investment in UK-based talent.

He also made clear the deal would ensure that ARM takes a leading role in AI industry in the years ahead.

“The UK is already recognized as one of the leaders of AI research and academia; together with Nvidia we have the ambition to evolve the UK into the centre of the AI world,” he wrote. “Nvidia will not siphon investment away from the UK. Instead, it will invest in the expansion of ARM’s Cambridge HQ and build a world-class AI research facility.”

“At its heart will be one of the world’s most powerful supercomputers, powered by ARM technology will enable scientists, engineers and researchers to conduct ground-breaking work that will accelerate the growth of the local and international ecosystem,” wrote Segars. “The combination of ARM’s technology with Nvidia’s deep expertise in AI will make the UK the leader in research, innovation and scientific discovery for decades to come.”

“Combining with Nvidia will give us the scale and the resources necessary to address the complexity of next-generation technology that no other path can,” he concluded. “This is an exciting prospect and I firmly believe this represents the best future for our company and to ensure that the UK stays at the forefront of the next 30 years of computing.”