Qualcomm's incoming CEO: If Nvidia's acquisition fails, we are happy to invest in Arm
Latest update time：2021-06-14
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Source: The content is compiled by Semiconductor Industry Observer (ID: icbank) from " telegraph ", author: Tang Shangshanglong, thank you.
Qualcomm's incoming CEO Cristiano Amon told The Daily Telegraph that Qualcomm has left the door open to an investment in Arm if the British microchip company's $40bn (£28bn) sale to Nvidia is blocked.
Qualcomm said it would be ready to buy a stake in Arm along with a consortium of industry players if Arm's owner SoftBank took the company public instead of selling it to Nvidia.
Nvidia has pushed back on the suggestion, saying an IPO would hinder Arm's growth.
Qualcomm, along with companies such as Google and Microsoft, have expressed concerns about Nvidia's acquisition of Arm, claiming the deal threatens the Cambridge-based company's independence and will hurt competition.
“If Arm has an independent future, I think you’ll find a lot of interest from many companies within the ecosystem, including Qualcomm, to invest in Arm,” Mr Amon said.
“If it leaves SoftBank and goes into the process of becoming a public company, [with] a consortium of investment firms, including many of its clients, I think that’s a strong possibility,” he said.
"We would certainly be open to it and we've had discussions with other companies that feel the same way." Other companies that have expressed concerns about the deal include Tesla and Amazon, industry sources said.
Arm, whose chip designs power billions of smartphones and a growing number of connected cars and smart devices, was listed in London until 2016, but SoftBank acquired the company for £24 billion that year.
Nvidia announced a deal to acquire the company last September, even though the deal faced multiple competition investigations in the UK, US, EU and China.
Nvidia said it expected the acquisition to close early next year and pledged to maintain Arm's neutral licensing model, but opponents said the deal would give Nvidia an unrivaled position in areas such as data center chips.
“That’s why it’s a logical conclusion for us and many other companies that investing in a strong and independent Arm is probably best for everyone,” Mr. Amon said.
An Nvidia spokesperson said: “To grow and meet the demands of the AI era, Arm needs more than an IPO. Arm needs an infusion of new technology that it can make available to Arm licensees everywhere, which is why we stepped up and agreed to purchase Arm. Our technology and Qualcomm’s are highly complementary – we welcome Qualcomm’s help in creating new technologies and products for the entire Arm ecosystem.”
Nvidia recently filed an application with Chinese regulators for the deal, seeking approval from Beijing. The U.S. Federal Trade Commission has asked customers of both companies to respond to the deal, while the U.K. Competition and Markets Authority is evaluating the acquisition on national security grounds.
A handful of companies are credited with bringing about the modern smartphone industry. Apple with its iPhone; Samsung with its cheaper devices for users around the world; and Google with its Android software.
Another, but perhaps less high-profile, business on the list is Qualcomm Inc. The $150bn (£106bn) San Diego giant may not be a household name, but it has developed much of the technology behind the wireless broadband networks that provide 3G and 4G internet connections.
Bosses are now betting on the 5G revolution - hoping it will deliver a major boost to growth as the technology's superfast internet potential extends from mobile phones to nearly every device in the modern home.
5G promises internet speeds up to 100 times faster than 4G networks and more reliable connections. The technology has its share of skeptics, who argue that the returns from such advances are minimal and that 5G has yet to demonstrate a compelling use case. Unsurprisingly, Qualcomm's incoming CEO, Cristiano Amon, is not one of them.
“When Qualcomm started working on 4G, everyone already had a cell phone,” he said.
"Most analysts were holding up their BlackBerrys and sending emails, saying 'Who needs 100 [megabits] of data in a phone?'.
“When [4G] happened, we saw the smartphone revolution, which changed society.”
Amon, a true engineer who spent 21 years at Qualcomm, takes over for outgoing CEO Steve Mollenkopf at a turning point for the company. Sales of 5G phones are expected to reach around 500 million this year, more than double last year.
The company has also been boosted by the decline of Huawei’s smartphone business, which has been hurt by Trump-era export controls. Huawei is one of the few companies that makes its own chips rather than buying them from Qualcomm Inc.
If 4G made mobile internet useful, 5G is about making it ubiquitous — an always-on, reliable fabric that connects everything.
“This connectivity is going to be there no matter what, it’s very new,” Amon said.
"5G, unlike all the other 'Gs,' looks a lot more like electricity. In the beginning you would talk about the use cases for electricity, it was good for light, it was good for powering electric motors. We don't talk about the use cases anymore, it's just there. That's how we think about making the connection."
Another selling point is 5G’s promise to move mobile networks from phones to just about anything. Qualcomm’s automotive revenue grew 40% last quarter from a year earlier, despite a chip shortage that hurt production, reflecting the increasing computerization of cars. Revenue from the Internet of Things — embedding chips and antennas in home appliances and manufacturing equipment, from kettles to industrial robots — grew 71%.
If Qualcomm can move from simply connecting people to connecting things, this development creates a path to enormous wealth for Qualcomm.
“All of these growth businesses have the potential to outpace mobile,” Amon said.
That's not to say the company hasn't profited from the rise of personal telephony.
Its technology has become so intertwined with modern mobile networks that every smartphone sold today pays patent royalties to the company, even those that don’t include their own mobile modems. Meanwhile, nearly every non-Apple smartphone sold in the Western world uses Qualcomm processing chips.
In other words, Qualcomm is hard to avoid doing business with. This position has brought a series of antitrust lawsuits and fines, making the company look like both a legal department and an innovation center.
In 2017, it was sued by the formidable duo of Apple and the US government simultaneously — both claiming Qualcomm was exploiting its monopoly by charging device makers unfair fees and raising phone prices. That same year, it was the subject of a hostile takeover attempt by Singaporean chipmaker Broadcom.
But Qualcomm ultimately prevailed on all three counts. It reached a settlement with Apple, a truce that led to the launch of the first 5G iPhone last year. The U.S. government’s case fell through on appeal, with Donald Trump blocking Broadcom’s proposed acquisition on national security grounds.
Qualcomm's shares have risen 58% in the last year on optimism about a recovery in the smartphone market and hopes that the worst of its legal challenges are over.
“Qualcomm has always been a company built on advanced technology, development and engineering,” Amon said.
“In the midst of everything that was going on … we just relied on what we did best.”
The company’s hopes of winning in 5G still face a pressing threat.
The revolution it anticipates will be driven not only by faster internet speeds but also by tiny processors designed by Arm, a British microchip company whose technology is included in nearly every device Qualcomm expects to come online.
Arm is known as the "Switzerland of chips" because it licenses its technology to anyone who asks, in a famously neutral business model. That practice has persisted after the company was acquired by Japan's SoftBank.
But last year, SoftBank agreed to sell the company to Nvidia, a Silicon Valley chip giant that competes with many of Arm’s customers. Opponents of the $40 billion deal said Nvidia’s ownership would put Arm’s open licensing model at risk and called on regulators to investigate the deal with a view to blocking it.
“The Arm ecosystem is successful because it’s open,” Amon said.
He worries that Nvidia will use the company to advance its own successful business developing artificial intelligence chips, ranging from high-performance data centers to battery-powered devices run by Arm.
“They have AI in the cloud, [it’s] about leveraging the Arm ecosystem to be the gateway on the device,” Amon said.
The trouble with the deal, he said, is that it’s unnecessary because Arm doesn’t need Nvidia to save it. Last year, for example, an Arm-powered supercomputer was announced as the world’s fastest computer for the first time. Apple switched to Arm-based chips in its computers. Nvidia announced its own Arm-based data center chips before the deal closed. Earlier this year, Qualcomm itself spent $1.4 billion to buy Nuvia, a chipmaker founded by former Apple employees that uses Arm-based designs.
“Arm has won and it’s won everywhere,” Amon said.
“It doesn’t make any sense to say, ‘Let’s take it away and make it better,’ after winning the battle because of its independence.
"We're not seeing benefits to the ecosystem. We're only seeing damage."
Nvidia said it was confident it could get through a phalanx of competition regulators, including in the UK, where the deal is being investigated on national security grounds. It also pledged to maintain Arm's open model, which it said was fundamental to the company's success.
Amon also raised another option: Qualcomm, he said, would be one of many large tech companies happy to invest in Arm if SoftBank brought it back to the stock market. This option was also raised by Arm co-founder and investor Hermann Hauser of British chip company Graphcore, who suggested the government could also take a stake.
That will be up to competition authorities, who have been surveying Arm’s customers and Nvidia’s rivals to see how they feel about the deal. Qualcomm, which has its own regulatory battle scars, will no doubt be involved.
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