Nvidia is a graphics processor (GPU) company, but it also makes systems on a chip (SoC) for mobile devices. And Arm licenses designs for its chips to other chip designers. Apple’s iPhone, iPad, and other devices are all Arm-based designs, and even the blistering-fast M1 Macs use the same chip architecture. According to Arm’s Japanese owner Softbank, “The technologies of processor designer Arm are used in the main chips of almost all smartphones and tablets.” In short, Arm is a big deal. And too important, according to regulators in the US, UK, and EU, to be owned and controlled by one chip manufacturer. “Nvidia’s deal to buy Arm for $66 billion collapsed on Monday because the regulations in the EU, US, UK raised voice on serious concerns about its effects on competition within the semiconductor industry. The concerns also included national security risks,” tech company founder Olivia Tan told Lifewire via email.
Arms Race
Arm’s position is interesting. It sells no chips of its own. Instead, it licenses its chip tech to other companies, including Apple, Qualcomm, and Microsoft. Its technology is also heavily used in Internet of Things (IoT) devices. To get an idea of what could go wrong if Arm was bought by a company that also designs and makes chips, let’s imagine that Apple bought Arm. Perhaps the deal might force Apple to continue licensing Arm’s tech. But can you really see Apple folding its own additions to Arm back into the general portfolio and licensing those features? Apple is all about creating custom hardware to run its custom software better. There would be a clear conflict of interest. “Please, no one suggest Apple buy chip-maker Arm. It would never be allowed to because owning Arm would enable Apple to cripple Qualcomm and a host of other chip-makers that use Arm designs. (This is why Nvidia couldn’t buy Arm either),” Apple watcher and journalist Ed Hardy said on Twitter. Nvidia is not Apple, but it is a Californian computer hardware and software company that designs its own chips. For the EU and UK, things are even more complicated. Ceding control of such important technology to a US company is not in the interest of either. And the UK’s politicians, according to Ars Technica, view Arm as a “strategic national asset.”
The Future of Chips
Why is a chip-design company so important? The answer is complex, but some trends are pretty clear. For years now, integrated companies like Intel have ruled the microchip world, for computers at least (remember, pretty much anything with a battery or power supply has some kind of chip in it these days). Intel designs and makes the chips and sells them to computer manufacturers. That model is now looking a bit creaky, as computer and phone makers design their own chips and then pay third-party fabricators to build them. The advantage is clear. Apple, for example, no longer has to wait for Intel to build a new chip in order to offer a new, faster Mac. Apple also designs its own chips and software in concert, but that trend is spreading. Google’s latest Pixel phones also use custom silicon, which may end up in its Chromebooks. Right now, chip fabricators like Taiwan Semiconductor (TSMC)—which makes Apple’s M1 and A-series chips—are several years ahead of Intel in terms of their factories, so PC makers doing things the old way are hamstrung by their reliance on commodity silicon in purely technical terms, too. Viewed in this light, Arm’s technology is essential to the future of the computer and phone industry, and it’s no wonder that regulators stepped in, and Arm’s customers filed complaints. This is a great example of how governments need to step in to protect—eventually—users like us.
