Softbank's acquisition of Arm for $ 32 billion in 2016 was lamented by many in the UK tech industry.
While politicians attempted to present the deal as evidence of Britain's industrial prowess and as evidence that Brexit was not the doomsday scenario feared by many, others felt that the country's best chance of creating a domestic international tech giant was was lost. That Brexit had weakened the pound and made ARM an easier target, adding to the offense of the injury.
As a silver lining, Softbank is committed to not only maintaining ARM research and development in Cambridge, but also expanding its workforce. Softbank's motivation for the deal was the belief that ARM's technology would be critical to powering the Internet of Things (IoT).
After four years it looks a little different. Softbank is under pressure after a series of failed investments – WeWork in particular – and has used the sale of more blue-chip stakes to take the pressure off the balance sheet.
Softbank and ARM
It is believed that ARM could be the next, with Softbank either re-circulating or selling the company. This has sparked speculation that Nvidia might be interested in – a move that would be controversial given that ARM's business model is based on licensing its designs to any vendor.
In theory, Nvidia would have the potential to adapt technical roadmaps to its own needs and thus strengthen its portfolio. However, choosing one organization over another would be at the expense of Arm's other customers.
While there is no denying that Nvidia could afford to be touted the $ 35 billion price tag, it suggests that Arm's value be lowered immediately if it falls into the hands of a seller.
Neither party commented on the rumors, but some analysts are skeptical of the logic of such an acquisition. Either way, the transaction would have difficulty getting regulatory approval and could take years to complete – destabilizing the entire poor ecosystem.
A separate report alleged that Apple had been approached to discuss a possible takeover, but was not interested.
CCS Insight's Geoff Blaber says Arm's value lies in its independence and that any move Nvidia makes could lead other vendors to look for an alternative – like the open source RISC-V
"In reality, Arm is a licensing company," he explained. “While this could put Nvidia in a powerful position of control, around $ 35 billion would be a high price to pay, and licensing alone offers little synergy. Nvidia could license the Arm technology and build its own CPU cores or be a partner without purchasing Arm.
"Many stories have been written about whether or not to acquire Arm for Nvidia. I firmly believe that such a move would damage Arm and its ecosystem and would not be good news for the industry if it were to continue."
A possible IPO?
Hermann Hauser co-founded Arm in 1990 and he too has reservations about the deal. He told the BBC that he was increasingly concerned that such a takeover was likely and that it would be a "disaster" if Arm were to fall into Nvidia's hands.
Hauser also turned down the sale to Softbank, but said that at least the Japanese company had retained its commitment to investing in Cambridge. He fears that decisions will be made in the US under Nvidia and that other chip manufacturers will look for an alternative to Arm technology.
He would prefer Arm to become a British-owned company again, and believes the government would do well to facilitate such a deal. While Hauser accepts that current circumstances mean public money is a high priority, he cites a willingness to invest in OneWeb as evidence that if there was a strategic incentive, the government would step in.
While the vast majority of the wireless industry would care more about the ecosystem and supply chain than strengthening the UK's position as a chip powerhouse, an IPO might be the best way to go.
"The alternative, and by far the best option, is for the poor to return to public ownership," concluded Blaber. “This would ensure its continued independence and ensure that the company maintains a management team that understands its value and priorities. Despite the speculation, I am optimistic that this is the more likely option. Let's hope SoftBank eventually goes the IPO path for Arm. "