Qualcomm open to investing in Arm as part of consortium

US chipmaker Qualcomm is seeking to invest in Arm as part of a consortium.

Arm’s owner SoftBank is hoping to list Arm next year after Nvidia’s $66 billion acquisition of the company fell through earlier this year.

Cristiano Amon, Qualcomm’s chief executive, told the Financial Times that the company is an interested party in investing, underlining that Arm is a very important asset given its crucial role in the global technology sector.

Amon emphasised that Qualcomm could join up with other chipmakers to buy Arm if the consortium making the purchase was big enough.

“You’d need to have many companies participating so they have a net effect that Arm is independent,” said Amon.

Qualcomm had opposed Nvidia’s proposed acquisition of Arm, saying that it made no sense for one chipmaker to take control of a company that was of such fundamental value to the entire sector.

“Arm has won everywhere because of the collective investment of the entire ecosystem, from companies like Apple and Qualcomm and many others, and that’s because it was an independent, open architecture that everybody could invest in,” said Amon, talking about the period before SoftBank purchased the company.

Qualcomm hasn’t spoken to SoftBank about the potential investment just yet, revealed Amon, He said the Japanese group had been prioritising resolving a dispute at Arm’s joint venture in China, where its CEO had refused to step down.

Amon’s proposition could provide additional momentum to the idea of a group of chipmakers becoming investors in Arm. Intel CEO Pat Gelsinger suggested the company could support a move earlier this year.

In March, SK Hynix was also reportedly reviewing plans to acquire Arm. Park Jung-ho, vice chairman and CEO of the company, said it was considering forming a consortium, along with strategic partners, to jointly acquire the chipmaker. He emphasised that he doesn’t think Arm can be bought by one organisation.

Arm strikes licensing deals with partners, no matter their size or where they are based. This has led to its intellectual property being used in the majority of chips sold globally. In August 2021, the Competition and Markets Authority (CMA) raised concerns around Nvidia’s acquisition of Arm as the merged business would have the capacity and incentive to restrict access to Arm’s intellectual property. This is used by companies that rival Nvidia to produce semiconductor chips, in competition with the US giant.

This was echoed by the US Federal Trade Commission (FTC) in December 2021. It said the deal would "stifle" competition for multiple technologies because Arm is a "critical input" that fosters competition between Nvidia and its rivals. It said this kind of acquisition would give Nvidia a way to undermine other companies.

Why is Arm so important?

Consumption of semiconductor chips is growing rapidly, in the EU alone the consumption of leading edge chips is forecast to grow exponentially by 15% compound annual growth rate between 2020-2030, Dieter Gerdemann, partner at Kearney, told IT Pro.

"It should come as no surprise that due to the dominance of Arm, in the supply of chips for smart phones, with 90% of devices using the chip and IoT applications, and in fields such as data centres that Qualcomm has chosen to take an interest," he added.

Gerdemann said that Nvidia's attempted takeover of Arm was met with critique across the semiconductor sector which argued for the independence of the ARM eco-system and the benefits ARM’s status as a chip powerhouse in Europe brings. 75% of leading-edge chips are currently being produced in East Asia and, following the EU Chips Act, the focus has never been more on Europe.

“The idea that Qualcomm might now invest in Arm, after arguing against the Nvidia takeover, is an interesting one," he said. "The consortium they indicate to invest through will certainly need to meet stringent requirements for openness and transparency in order to gain acceptance of the global semiconductor community.

"However, we are convinced of the benefits of a publicly listed Arm entity, as the forces of the free market will ensure Arm stays competitive and continues to be the innovation powerhouse that it is today – to the benefit of the semiconductor ecosystem and Europe as a semiconductor design powerhouse.”