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Chip Consortium Buying Arm Would Be ‘Gamechanger’: Research Firm
A group of chipmakers may be lining up to grab ahold of Arm’s chip business to address power struggles. Intel Corp and Qualcomm have already publicly signaled interest in such a deal.
An alliance of the world’s largest rival semiconductor companies purchasing U.K.-based chip designer Arm Ltd. outright would change the face of the industry, according to research firm GlobalData.
After Qualcomm on Tuesday expressed an interest in joining such a consortium of suitors that would include some of the biggest names in the chip industry, analysts and industry experts are taking the proposition very seriously. While Santa Clara, Calif.-based Nvidia’s $40 billion Arm bid collapsed under the weight of Federal Trade Commission scrutiny, an alliance of investors would avoid such legal action, GlobalData said.
“This could be the most significant event in the semiconductor industry since Intel, TSMC, and Samsung took strategic stakes in ASML in 2012… As a result, ASML became the only company able to offer the means to make new generations of the most advanced chips,” Mike Orme, consultant analyst in the thematic research team at GlobalData, said in a statement. “If Arm technology can become the blueprint for very low-power-draw computing, it will radically reduce the energy demand and cost of computing infrastructure.”
[RELATED STORY: Nvidia Confirms $40B Arm Deal Is Dead Due To ‘Regulatory Challenges’]
Computing drains more than 10 percent of the world’s energy, and GlobalData projects that number could reach as high as 20 percent by 2030. “That’s why a consortium investing in Arm would be such a game changer,” Orme said.
Intel’s Pat Gelsinger in a February interview with Reuters signaled his company’s interest in joining an Arm buyout plan. “If a consortium were to emerge, we would probably be very favorable to participate in it in some manner,” he told Reuters. Such a consortium had been quietly floated even before Nvidia’s 2020 announcement about its attempt to purchase Arm, Gelsinger said to Reuters.
San Diego, Calif.-based Qualcomm added more fuel to the speculation this week after CEO Cristiano Amon jumped into the Arm buyout ring. “It’s a very important asset and it’s an asset which is going to be essential to the development of our industry,” Amon told the Financial Times.
Arm is a fabless chip designer that licenses blueprints for its low-power chips. Rival chipmakers were concerned when Nvidia nearly bought Arm - as the fierce GPU competitor would control licensing agreements for the technology. Japanese conglomerate SoftBank holds a majority stake in SoftBank and was said to be shopping a possible IPO for the chip designer. But analysts think in the current climate, that might be a tough sell, as venture capital markets tighten, and investors have turned their noses up at pricey IPOs. That may leave an opening for the chipmaker alliance to swoop in and make an attractive offer.
A savvy competitor like Intel may see Qualcomm as less of a threat, as the fabless chipmaker mostly competes in the mobile chip arena, says one analyst. “Qualcomm and Intel are frienemies out there,” said Roger Kay, founder and analyst at Endpoint Technologies Associates. Other “frenemies” might include TSMC, Samsung and even Apple.
Kay said he wouldn’t be surprised if Intel’s Gelsinger meeting with Samsung Electronics Vice Chairman Lee Jae-yong, reported by The Korea Herald, included talks about an Arm agreement. “I’m pretty sure it probably came up,” Kay said with a chuckle.
Kent Tibbils, vice president of marketing at Freemont, Calif.-based ASI Corp, said such an alliance might come down to one thing: power. “Power consumption, whether it be in (Internet of Things), automotive, or increasingly in the data center market, is absolutely a growing concern but that power savings cannot come at the expense of performance, so both are critical factors.”
Both Tibbils and Kay noted that x86 CPU chips were still dominant in the data center space because of speed – but power is increasingly becoming a factor as companies wrestle with Environmental, Social and Governance (ESG) standards increasing across the board. But Intel is not likely trying to give up its reputation for speed.
“The x86 chips have always been optimized for performance… x86 runs hot but kicks ass,” he said. “Intel still thinks of itself as a performance company.”
Kay sees Intel’s interest in Arm as a competitive posturing to keep other chipmakers out of the data center space and hold on to x86 dominance in CPU computing. That position might turn out to be a positive for all players: “I think it would be good for the industry to have a neutral consortium with rules of engagement for everyone (where Arm is concerned),” Kay said.