What you’ll learn:
- Why the industry is unsettled by Nvidia’s shock acquisition of Arm
- Why this may be a wake-up call for major players that are Arm licensees
- What other potential choices manufacturers may now be considering
Nvidia’s acquisition of Arm represents a major shift and it will affect many of the players in the electronics space. Senior Content Director Bill Wong spoke with Mark Lippett, CEO of XMOS, to get his perspective of the impact of this acquisition.
How big a shock is this acquisition for the electronics sector?
The acquisition of Arm by Nvidia—an erstwhile customer of Arm—is potentially a seismic shock for the electronics sector, particularly for chip vendors. As should be immediately apparent, this acquisition is forcing a major rethink of one of the key assumptions that so much of the chip business has been built on for at least the last 20 years.
Contrary to established business wisdom that organizations should retain control of their strategic assets, the chip industry has been content to divest itself of processing technology and rely on licensing Arm technology.
Would they have made the same decision if the processor IP was being licensed by a competitor, say Nvidia, for example?
What does the acquisition mean for manufacturers?
This is a massive moment for manufacturers. Arm cores sit at the heart of 160 billion electronic devices, but I suspect a good number of those licensees are wringing their hands at the moment.
You could argue, given the reliance many chip companies have allowed themselves to have on Arm, that this is a case of chickens coming home to roost. That may be too simplistic—ultimately Arm has done a fantastic job at creating a proposition attractive enough to seduce even the biggest players into following this path.
Regardless, manufacturers are now faced with a major strategic choice that few if any were expecting. Do they stay within the Arm ecosystem and take their chances with continuing to license technology? Or do they turn down an entirely different strategic path?
Is there a conflict between Nvidia’s and Arm’s business models? Is it possible to resolve that conflict?
It’s hard to argue that this doesn’t raise questions. The same IP that was previously licensed by a strictly neutral party is now in the hands of a direct competitor to many of Arm’s licensees.
Nvidia has promised to retain an “open-licensing model and customer neutrality” following the acquisition, but can the industry afford to continue to put its faith (and fortune) in this assurance? Does that mean Nvidia will remain as one of Arm’s customers with equal standing, keeping a level playing field for all?
Ultimately, that’s the million-dollar question for the industry. But only time will tell exactly how this potential conflict is resolved.
What do you predict Arm licensees will do in response?
As far as I can see, there are three potential paths to electronic manufacturers: 1) keep to business as usual, 2) pivot to another licensed architecture, or 3) gain back control of this most important of assets.
Business-as-usual seems an unlikely strategy, particularly for the largest Arm licensees, for whom this news will be a massive wake-up call.
There’s already lots of talk about manufacturers turning to other licensed cores. Synopsys offers its ARC processors, Cadence has its Tensilica processors, and of course RISC-V has received a lot of attention in the immediate aftermath of the announcement. But RISC-V is fragmented and immature, and licensing another processor from another company may just be jumping out of the frying pan and into the fire.
The last option is for chip companies to retake ownership of their processor architectures. While this option is undoubtedly the most strategically robust, it does not come without risk or significant costs. How many manufacturers will really be prepared to go down this route?
What does the future look like as a result of this acquisition?
There’s no minimizing the significance of this news for the whole sector. The future will be entirely defined by where manufacturers choose to fall on the spectrum of paths I previously outlined.
There’s inevitably going to be a transition period where these strategic decisions play out, and I think there will genuinely be a mix of responses. One thing is certain, though. Wherever we go next it will not look like what we have today.
