Not if Apple decides to buy ARM out. With all their cash, Apple could make ARM "an offer they can't refuse".
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Arm wants to charge dramatically more for chip licenses
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That would probably get at least as much FTC attention as Nvidia's abandoned acquisition.
Statement Regarding Termination of Nvidia Corp.’s Attempted Acquisition of Arm Ltd.
In response to the announcement that Nvidia Corp.
Search terms: ftc nvidia arm
While Apple was involved in the original funding of Arm, they eventually sold all of their shares. When they starting doing the iphone they initially got chips and then chip designs and only later did their own chip designs using the Architecture license. I don’t think that original relationship matters in terms of the current license arrangement.
As Tagbert states in the beginning Apple purchased an Architectural license which allows Apple to develop their own cores and which run the ARM instruction set but with Apple compilers. All of the other users of ARM do not design their own cores and licence their cores from ARM. As I understand it Apple's deal with ARM was a one time payment.
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Apple will never purchase ARM. Apple does not want to become a manufacturer of ARM cpu's supplying others. They have their own design team and they do not want to start designing and manufacturing generic stuff for everyone else.
It doesn’t make much sense for apple to buy ARM. Apple just uses the architecture unlike Qualcomm which uses its designs. Qualcomm will benefit much more than Apple.
Why would Apple want that? Licensing technology to others is as far from Apple business as it gets.
I wrote this over a year ago, before the Nvidia deal died:
Unpopular opinion: I'd like to see this deal go through.
Unpopular opinion: I'd like to see this deal go through.
- Nvidia needs its own world-class CPU team to compete with SoCs designed by Apple, Qualcomm, Mediatek, AMD, Intel, etc.
- Yes, Nvidia doesn't need to buy ARM to design ARM-based CPUs. But Nvidia thinks it can help accelerate ARM's adoption in devices other than low-powered devices, improve its designs by combining IPs, inject resources into the company. Remember that ARM doesn't actually make that much revenue or profit despite dominating mobile devices.
- A standalone ARM does not actually have enough money and resources to continuously compete with Apple, AMD, Intel designs. And it shows. Apple designs are far ahead of ARM designs on mobile. Intel and AMD designs are significantly more powerful in non-mobile devices (albeit at a lower efficiency). For context, ARM made around $2 billion in revenue in 2021. Intel $78 billion. AMD $15 billion. Apple $365 billion.
- ARM has been too slow to get into laptop, desktop, workstation, server, and supercomputer market. This is where I think Nvidia can help accelerate a lot and add a 3rd option to Intel/AMD duopoly. Only Apple has managed to successfully bring ARM to high power computers.
- Nvidia + ARM adds one more competitor to the laptop, desktop, server, supercomputer landscape. We've seen a duopoly by AMD/Intel for far too long which set innovation back a decade in the 2010s.
- Nvidia has been losing mega government contracts to AMD/Intel because they can't supply CPUs.
- Nvidia would like to control their entire hardware stack for server solutions. Right now, they have to use Epyc/Xeon.
- Even their upcoming Grace CPU simply uses stock Neoverse cores
- The future of mobile devices (maybe even desktops) is clearly a SoC/APU approach. This leaves Nvidia vulnerable because they don't make SoCs/APUs. This is a strategic acquisition for Nvidia.
- It's not fair to ARM employees and shareholders to block this deal. Blocking this deal benefits Qualcomm, AMD, Intel shareholders. You're just choosing one side over the other by blocking this deal.
- ARM has contracts with existing customers. Even if Nvidia buys them, they can't just deny existing customers with licenses.
- Nvidia is too smart to ruin ARM's business model. They're not going to spend $40b just to destroy all of ARM's revenue overnight.
- Qualcomm has clearly spent a lot of lobbying money to convince the US government to block this deal. It's actually weird that the US government would block an American company from acquiring important IP from a British/Japanese company. I'm guessing Qualcomm has bought off the right politicians.
- I think this deal benefits consumers, adds more competition. But unfortunately, there are too many myths and politics in this deal.
Here's what I wrote when SoftBank wanted to IPO ARM (1 year ago):
I'm not buying. While I believe that ARM CPUs will continue to take marketshare away from x86 on laptops, desktops, and servers, I don't believe the company will be that profitable.
ARM's business model makes peanuts compared to Apple, Qualcomm, AMD, Intel, Nvidia. ARM's last reported revenue was $2b/year. Apple makes that in 1.5 days. Microsoft makes 88x more. Intel makes 39x more. Qualcomm makes 17x more.
In essence, ARM can't compete with the big boys and far more profitable companies are poaching their talent. Take for example, Mike Filippo, a lead architect at ARM, was poached by Apple then poached by Microsoft.
ARM simply can't compete with the money that big tech can throw at their top employees. If you're a top student graduate, you're going to Apple/Intel/AMD/Nvidia. You're not going to ARM Austin Texas. Whenever a big tech company wants to build a custom ARM chip, they go raid ARM talent.
This basically means ARM won't be able to match the performance of big tech designs with their stock ARM cores. And it shows because Apple Silicon is far ahead of stock ARM cores, Qualcomm themselves will be building custom ARM cores again, and Ampere is ditching stock ARM coresfor their own custom server cores..
Nvidia buying ARM would have injected the capital needed to compete with Apple, Qualcomm, Amazon, Microsoft, Google, AMD, Intel designs and future designs. And it would have been cool to see ARM SoCs with Nvidia IP. I was/am one of the few people on Reddit who actually liked the deal. The vast majority of people were in the camp of "zomg Nvidia closed source monopoly price fixing omg". Reddit hive mind is real.
Anyways, I'm bullish on custom ARM designs long-term. I'm bearish on ARM the company because their stock cores can't compete with high-end custom ARM cores and high-end x86 cores. If their stock cores can't outperform custom cores, then they will be reduced to small licensing fees forever. This doesn't justify their $40b+ valuation. Every big player in the mobile space is making tens or hundreds of billions. Somehow the tech that is crucial to the mobile world is making peanuts. This isn't going to change and might get worse.
There is no doubt that Softbank saw the same thing and wanted to unload ARM. First, by trying to sell it. Now by trying to IPO. Buyers beware.
I'm not buying. While I believe that ARM CPUs will continue to take marketshare away from x86 on laptops, desktops, and servers, I don't believe the company will be that profitable.
ARM's business model makes peanuts compared to Apple, Qualcomm, AMD, Intel, Nvidia. ARM's last reported revenue was $2b/year. Apple makes that in 1.5 days. Microsoft makes 88x more. Intel makes 39x more. Qualcomm makes 17x more.
In essence, ARM can't compete with the big boys and far more profitable companies are poaching their talent. Take for example, Mike Filippo, a lead architect at ARM, was poached by Apple then poached by Microsoft.
ARM simply can't compete with the money that big tech can throw at their top employees. If you're a top student graduate, you're going to Apple/Intel/AMD/Nvidia. You're not going to ARM Austin Texas. Whenever a big tech company wants to build a custom ARM chip, they go raid ARM talent.
This basically means ARM won't be able to match the performance of big tech designs with their stock ARM cores. And it shows because Apple Silicon is far ahead of stock ARM cores, Qualcomm themselves will be building custom ARM cores again, and Ampere is ditching stock ARM coresfor their own custom server cores..
Nvidia buying ARM would have injected the capital needed to compete with Apple, Qualcomm, Amazon, Microsoft, Google, AMD, Intel designs and future designs. And it would have been cool to see ARM SoCs with Nvidia IP. I was/am one of the few people on Reddit who actually liked the deal. The vast majority of people were in the camp of "zomg Nvidia closed source monopoly price fixing omg". Reddit hive mind is real.
Anyways, I'm bullish on custom ARM designs long-term. I'm bearish on ARM the company because their stock cores can't compete with high-end custom ARM cores and high-end x86 cores. If their stock cores can't outperform custom cores, then they will be reduced to small licensing fees forever. This doesn't justify their $40b+ valuation. Every big player in the mobile space is making tens or hundreds of billions. Somehow the tech that is crucial to the mobile world is making peanuts. This isn't going to change and might get worse.
There is no doubt that Softbank saw the same thing and wanted to unload ARM. First, by trying to sell it. Now by trying to IPO. Buyers beware.
Here's my piece on the existential threat to ARM's business (1 year ago):
ARM currently competes with some companies it licenses to. Apple being one.
The point is that the biggest ARM customers pose an existential threat to ARM. Yes, they will use the ARM ISA for all their designs. But if their designs are so much better than stock ARM cores, then ARM will have to exit custom core design business because they just can't compete.
Let me give you a scenario:
ARM currently competes with some companies it licenses to. Apple being one.
The point is that the biggest ARM customers pose an existential threat to ARM. Yes, they will use the ARM ISA for all their designs. But if their designs are so much better than stock ARM cores, then ARM will have to exit custom core design business because they just can't compete.
Let me give you a scenario:
- Nuvia blows stock ARM designs away and is competitive with Apple Silicon (they're confidently and publicly promising this)
- Nuvia designs move into mobile
- Qualcomm and Apple completely own the mobile space with custom designs
- Amazon/Microsoft/Google/Ampere release custom ARM cores to better differentiate between clouds.
- AMD and Intel still hold the performance crown over ARM stock designs in the server
If you read my 3 posts above, you'd understand why ARM is doing this. It's not a surprise at all. Not only does Softbank want to recuperate some money, ARM is actually in an existential crisis right now depending on how good Nuvia cores are and how good other custom designs are.
Wasn't this Qualcomms business model for a long time? Selling based on the price of the finished product? Perhaps Qualcomm shouldn't have been so quick to advocate for this business model ...
This is correct. This is most certainly a direct shot at Qualcomm. See my posts about Qualcomm's Nuvia efforts above. It's an existential crisis for ARM if Nuvia cores are good.
In order for ARM to protect itself, it wants to make sure a lion's share of profits from Nuvia cores are redirected back to ARM.
That has always been the case throughout history, for the most part, the designer/inventor very rarely make the same kind of money that the producers of the designer/inventor makes.
The problem with the acquisition was that Nvidia is a company with a culture based on aggressive exploitation of their market leverage to increase their product adoption, while ARM's business is about licensing technology to others. Not to mention that Nvidia would have a considerable conflict of interest if acting both as a system vendor and a IP vendor. There are thousands of companies that rely on ARM technology being available under fair conditions and very little reason that Nvidia would continue to let that happen. It's just the complete opposite of their corporate DNA.
Frankly, ARM would be great as a non-profit controlled by a consortium of industry leaders and ARM customers. This is one of those curious cases when the capitalism gets in the way of capitalism.
Here's what I wrote about a potential consortium buying ARM (1 year ago):
Let's suppose that the biggest ARM license customers put up $40 billion to buy ARM together. This set of customers includes Apple, Intel, AMD, Samsung, Qualcomm, Mediatek, Nvidia, Ampere, Amazon, Microsoft, Google.
Let's review some conflict of interest:
- Apple does not want stock ARM designs to be good because that would mean faster Android devices
- Qualcomm and Mediatek wants stock ARM designs to be good because it would mean more competitive with iPhones
- But Qualcomm eventually wants stock ARM designs to be bad because of Nuvia
- AMD/Intel does not want ARM designs to be good because it would compete with their laptop and server CPUs
- Amazon/Microsoft would want ARM to prioritize server designs over mobile designs
- Qualcomm and Mediatek would want to prioritize mobile designs over server/laptop/desktop designs
- Nvidia would want ARM to prioritize high bandwidth CPU designs instead of general-purpose CPUs
Also fun fact, Apple has never paid $3.6 billion or more for an acquisition. Their largest was $3b for Beats. You're asking Apple to pay that much for something that makes no difference to them whether Nvidia or any other company owned ARM. As an Apple shareholder, I would slap Tim Cook (if I can) if he agreed to throw away $3.6 billion.
So you're not a fan of Nvidia because of their aggressive exploitation of their market leverage, but you're a fan of Apple?
Yes, I am. Because, you see, Apple cooks their own soup, while Nvidia would like to spoil any soup that doesn't have their potatoes in it. One can complain all one wants about Apple's opinionated decisions, high prices, proprietary APIs, or missing features, but in the end of the day you get what you buy. It's your choice to have chosen Apple and put your trust in their products. But Nvidia, they are different — their decisions affects a much larger group of users than just their customers. It affects gamers, researchers, companies, institutions etc. Nvidia never backed down from screwing everyone in order to improve their own position. The fragmented GPI API ecosystem we have right now? I am fairly convinced that it's mostly their doing. No, you can't compare them to Apple. Apple only screws their own users
Which is why I am talking about non-profit with a clearly defined mission and not ownership by corporate entities.
I guess I’m not convinced that Apple isn’t any worse and that Apple only screws their own users.Yes, I am. Because, you see, Apple cooks their own soup, while Nvidia would like to spoil any soup that doesn't have their potatoes in it. One can complain all one wants about Apple's opinionated decisions, high prices, proprietary APIs, or missing features, but in the end of the day you get what you buy. It's your choice to have chosen Apple and put your trust in their products. But Nvidia, they are different — their decisions affects a much larger group of users than just their customers. It affects gamers, researchers, companies, institutions etc. Nvidia never backed down from screwing everyone in order to improve their own position. The fragmented GPI API ecosystem we have right now? I am fairly convinced that it's mostly their doing. No, you can't compare them to Apple. Apple only screws their own users
To me, it’s just business.