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Proposed acquisition of ARM Limited by NVIDIA: public interest intervention

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Re: Proposed acquisition of ARM Limited by NVIDIA: public interest intervention

#51

Post by skelter »

The semiconductor supply chain is now almost completely disaggregated ie everyone specialises in just a small part of the value chain. ARM’s speciality is in CPU design and it has carved out for itself the enviable position of being the defacto standard for mobile applications - almost every single phone on the planet has ARM processor(s) running it. And their products are in dozens of other end applications segments as well. These chips are embedded in System on Chip IC’s and manufactured by third party companies like TSMC and UMC etc to end customer specifications, like Apple or Samsung for example.

The problem with the original SoftBank deal, and now the Nvidia deal, is that these companies will simply hollow ARM out (slash R&D, cut staff etc) to pump up the target’s value, before flogging it off or breaking it up. The stock market doesn’t value synergies, although it is quite happy to punt this aspect when M&A deals are in the offing. Given its strategic position as the defacto standard for mobile comms, that’s a serious threat.

ARM also gives the UK strategic leverage in any trade negotiations. Would we knowingly allow Rolls-Royce Jet Engines to be flogged off? No. Ditto ARM.

So, I think this is the right policy and hopefully the government will see fit to step into other deals like this and block them.

I’ve been through a PE acquisition. We were stripped bare and bits sold off before finally getting our mojo back. I benefited handsomely but we were not the company we were before and the job losses in the process were huge. It will be no different with Nvidia’s proposed take over of ARM.

(disclaimer: I was a semiconductor executive in a global MNC).

Re: Proposed acquisition of ARM Limited by NVIDIA: public interest intervention

#52

Post by tokyojoe »

The semiconductor supply chain is now almost completely disaggregated ie everyone specialises in just a small part of the value chain. ARM’s speciality is in CPU design and it has carved out for itself the enviable position of being the defacto standard for mobile applications - almost every single phone on the planet has ARM processor(s) running it. And their products are in dozens of other end applications segments as well. These chips are embedded in System on Chip IC’s and manufactured by third party companies like TSMC and UMC etc to end customer specifications, like Apple or Samsung for example.

The problem with the original SoftBank deal, and now the Nvidia deal, is that these companies will simply hollow ARM out (slash R&D, cut staff etc) to pump up the target’s value, before flogging it off or breaking it up. The stock market doesn’t value synergies, although it is quite happy to punt this aspect when M&A deals are in the offing. Given its strategic position as the defacto standard for mobile comms, that’s a serious threat.

ARM also gives the UK strategic leverage in any trade negotiations. Would we knowingly allow Rolls-Royce Jet Engines to be flogged off? No. Ditto ARM.

So, I think this is the right policy and hopefully the government will see fit to step into other deals like this and block them.

I’ve been through a PE acquisition. We were stripped bare and bits sold off before finally getting our mojo back. I benefited handsomely but we were not the company we were before and the job losses in the process were huge. It will be no different with Nvidia’s proposed take over of ARM.

(disclaimer: I was a semiconductor executive in a global MNC).

Re: Proposed acquisition of ARM Limited by NVIDIA: public interest intervention

#53

Post by ClumsyPilot »

eptcyka wrote: post #49
wAYshzRtw wrote: post #10

> Under the powers set out in the Enterprise Act 2002, the Secretary of State for Digital, Culture, Media and Sport is able to intervene on national security grounds. > The Competition and Markets Authority (CMA) will prepare a report on the competition and national security aspects of the proposed transaction. So it's being framed as a national security threat, interesting.

It'll be interesting to see how they can justify Nvidia's ownership of ARM a security threat, whilst ARM being owned by a Japanese investment bank being _just fine_. What's the difference?

Its obvious, firstly the bank is not going to mess with chips designs and block off customers the way Nvidua might becauae to it, they are conpetitirs.

Secondly, Nvidia will probably restructure / absorb ARM. At the moment its corporate structure is mostly intact

Re: Proposed acquisition of ARM Limited by NVIDIA: public interest intervention

#54

Post by dijit »

klelatti wrote: post #32
sgt101 wrote: post #27

Earlier quoted context omitted.

I think that the capability to design a modern CPU is pretty essential for future defence independence. I think that ARM represents a good chunk of the UKs claim to be able to do that. If the UK wants a share of future US programs of all sorts then it needs to be able to make these claims - or face must less generous terms.

What's the point of being able to design CPUs if we can't make them? We certainly don't have defence independence at all. I'm not sure about the second point but it seems premised on withholding IP from US which seems unlikely. Much more likely that there is intense collaboration between say GCHQ and Arm (maybe both ways -> GCHQ gets to understand modern CPU security issues from Arm and Arm benefits from GCHQ input o…

We get our panties in a bunch (and I do too) about the real high end fabs for CPUs, but push-come-to-shove there _are_ fabs in the UK.

Infineon (German owned) and Nexperia (Dutch owned) both own fabrication plants in the UK, so it's possible to scale that up if we were at war, the knowledge is here.

Re: Proposed acquisition of ARM Limited by NVIDIA: public interest intervention

#55

Post by ajdlinux »

toxik wrote: post #24
wAYshzRtw wrote: post #10

> Under the powers set out in the Enterprise Act 2002, the Secretary of State for Digital, Culture, Media and Sport is able to intervene on national security grounds. > The Competition and Markets Authority (CMA) will prepare a report on the competition and national security aspects of the proposed transaction. So it's being framed as a national security threat, interesting.

This is actually a fairly common way to justify protectionist and interventionist policy. It's "think of the children" in a new disguise, really. But such is policy making. You have to justify your policy with what is popular, not with the truth. For example: lax covid restrictions justified because we can't be sure it'll work, vs. because we know that it'll hurt the economy.

And in the case of issues that could touch on foreign trade or investment treaties, you may have to justify your policy using certain exceptions such as "national security".

Re: Proposed acquisition of ARM Limited by NVIDIA: public interest intervention

#58

Post by cmrdporcupine »

klelatti wrote: post #22
sgt101 wrote: post #21

Earlier quoted context omitted.

I think it's a national capability to do things move - probably sharpened by the realization (in the middle of the pandemic) that not everyone was a friend of the UK and would quite happily watch us drown while sitting round singing songs about how many lifebelts they had.

I'm sceptical about that - we don't own much technology IP and we're hugely reliant on the US already. I think it's a much more specific security issue.

Being dependent on the US turns out to be not a great strategic scenario in this decade.

(Speaking as a Canadian who has watched 30 years of continental economic integration and heard lots of friendly talk since the campaign for the 1988 Free Trade Agreement but now back of the line waiting for vaccines imported from Europe because the US won't export to us and our domestic manufacturing was sold off decades ago because of said continental integration.)

Also the US itself has used the "national security" excuse for trade issues multiple times over the last few years where it was seemingly not the case (steel & aluminum trade disputes, etc). So the precedent has been set. And there's little sign of Biden really doing much to reverse that.

Re: Proposed acquisition of ARM Limited by NVIDIA: public interest intervention

#59

Post by the_duke »

tokyojoe wrote: post #52

The semiconductor supply chain is now almost completely disaggregated ie everyone specialises in just a small part of the value chain. ARM’s speciality is in CPU design and it has carved out for itself the enviable position of being the defacto standard for mobile applications - almost every single phone on the planet has ARM processor(s) running it. And their products are in dozens of other end applications segments…

You apparently double-posted?

https://news.ycombinator.com/item?id=26862687

Re: Proposed acquisition of ARM Limited by NVIDIA: public interest intervention

#60

Post by tokyojoe »

the_duke wrote: post #59
tokyojoe wrote: post #52

The semiconductor supply chain is now almost completely disaggregated ie everyone specialises in just a small part of the value chain. ARM’s speciality is in CPU design and it has carved out for itself the enviable position of being the defacto standard for mobile applications - almost every single phone on the planet has ARM processor(s) running it. And their products are in dozens of other end applications segments…

You apparently double-posted? https://news.ycombinator.com/item?id=26862687

Yeah. Looks like that. :)
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