37 Comments

Summary:

The mobile space sometimes seems to generate more rumors than other segments, and a big rumor has surfaced recently with far-reaching ramifications should it come about. The London Evening Standard reported that Apple is considering a bid to acquire ARM Holdings. Should this be allowed?

Circuit board.

The mobile space sometimes seems to generate more rumors than other segments, and a big one has surfaced recently with far-reaching ramifications should it come to fruition. The London Evening Standard reported that Apple is considering a bid to acquire ARM Holdings. ARM is the tech company inside many mobile products — Apple licenses it for the iPad as a matter of fact. Just about every Android-based tablet and top smartphone on the market uses ARM technology. Should Apple buy ARM it would push the entire mobile space, Android in particular, into utter chaos.

I’m not sure the anti-trust folks would like Apple to absorb ARM, but it’s not clear if that would be the case. ARM has stiff competition, so it’s not a given that Apple would be unfairly stifling anything by the acquisition. Should Apple grab ARM, it might be in the company’s best interest to stop licensing ARM technology to others. That would set things into a free fall, particularly in the smartphone space as ARM technology is inside most superphones produced currently.

Apple definitely has plenty of cash laying around, more than enough to buy ARM. I believe it would be a great business move on Apple’s part to do so, even though as a consumer I likely wouldn’t like the results. What do you think? Should Apple buy ARM?

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  1. If they don’t, someone else will cough Google cough.

  2. James, if ARM has stiff competition, how would Apple buying ARM push the entire mobile space into utter chaos?

    1. ARM is the hot ticket in smartphones right now, and if Apple took it off the market it would force a lot of scrambling, I think. Most major phones today, especially Android phones, have ARM tech onboard.

    2. ARM is a CPU architecture, which has majority market share in the mobile phone space. Not just smartphones – all phones. Taking ARM out of circulation would be like Apple buying Intel and taking x86 off the market except in Macs. What would Dell or HP put inside their computers? They couldn’t use AMD chips, because they’re also x86, so they’d have to use, what, Itanium? It’d be a disaster for the whole PC industry. It’d take years to develop a new architecture to rally around and bring chips to market. Same in the phone space.

      The FTC would probably not let them get away with blocking out competitors, although certainly keeping the most cutting edge designs for themselves and overcharging for weak old designs would be a gigantic advantage. Also, as ARM is a U.K. company, a deal would have to pass muster with more than one government.

      The same advantages would go to anyone besides Apple who might also be considering a bid for ARM. There aren’t many industry players that would make a good steward for the company. Any buyout offer would completely reshape the phone industry and other industries also.

  3. No. Apple is a huge monopoly in the way they run things. If they buy ARM, other smart phone manufacturers will be in serious trouble as they would have to reprogram their phones to work with different chips.

  4. It would be a bad day for mobile tech.

  5. Kevin C. Tofel Thursday, April 22, 2010

    Not sure it would be a great business move at all. ARM’s market cap is $6b and anyone buying it would likely pay a premium. Apple could build their own chip fabrication plant for less and not face as much (if any) regulatory scrutiny.

    1. I don’t believe ARM makes chips at all, simply licenses the technology to chipmakers. The Apple A4 chip used in the iPad has ARM technology inside.

      1. I understand that. I’m not saying that buying ARM equates to building chips. ;) Apple would only buy ARM to do one of three things – earn licensing fees, something they historically don’t do, control the mobile chip market, which I don’t think would be allowed, or stop paying licensing fees to build their chips. In the third case (also unlikely) I’d have to wonder why spend $6b plus a premium to get that?

      2. Or four- take ARM technology inhouse and off the market. Agreed they’d be paying a big premium for that but oh the chaos that would ensue. Jobs likes chaos in other companies. :)

      3. That was point 2 in my reply: control the chip market. ;) It’s not worth $6b plus premium as there’s no guarantee it would pan out from a regulatory standpoint. That’s a big bet on a high risk – not smart business for a well established company.

    2. Agree completely. Apple could build an ARM technology equivalent at a cost much less than what it would take to buy ARM. It would take longer, but it would be cheaper. The delta in cost there would be for exclusivity of the technology. Regulators (hopefully) will recognize that, and would never allow the deal to occur.

    3. The industry player most threatened by ARM is Intel. Apple buying ARM and reducing its customer base to themselves would only be doing Intel a huge favor – possibly handing the bulk of the mobile phone space to Atom. Ultimately it’d only boil down to the iPhone having somewhat better battery life than competitors. Meanwhile Apple would have to front all the development costs for next-gen ARM designs and possibly face higher fab costs as well.

      The most sensible buyer for ARM would be Intel (if they could get away with it) or possibly GlobalFoundries.

  6. After reading the ARM wiki I don’t think it would be possible. They license ARM processors to the world. There is no way that any regulatory committee would let it pass.

    1. And by the same token, any other firm using ARM IP and looking to acquire ARM will have the same problem with US and European regulators. Google might have had an unimpeded route had they not decided to have their own branded phone, ha ha. BTW, Apple already owns a part of ARM anyway, at least they did when they helped found it, unless all stake in the company was sold in earlier years, particularly the lean late 90s.

  7. Patrick Perez Thursday, April 22, 2010

    Even if Apple did buy ARM, I don’t see them shutting down licensing (ARM’s actuall business) as it isn’t as if Apple products could hope to fill the void of an ARM-less world. Apple simply couldn’t build enough stuff at their prefered price points. ARM tech is in the cheapest phones and I’m sure that’s the lion’s share of licensing revenue… low cost SoC licenses. I also don’t see what Apple would get out of the bargain other than (an admittedly nice) revenue stream. ARM licensees are already free to adapt the tech that they license from ARM, so with the PA Semi acquisition from a few years ago, I just don’t see this as a strategic fit. Of course, I sit in a cubicle, not in a board room, so…

    Patrick

    1. Most superphones today have ARM tech inside. It’s not just the cheap phones. Virtually all cool Android and upcoming Windows Phone 7 phones use ARM tech.

      1. All mobile phones have plastic in it but i don’t see them trying to corner the market…. yet :)

      2. I brought up the low end phones to highlight the fact that the volume is there. Nokia, as we all know, sells zillions of phones worldwide that readers of this site would scoff at. And Apple has no interest in that business.

        Personally, I’m looking forward to Coretex A9 processor based superphones.

  8. Apple sucks & blows!

  9. Apple is hauling in more than $3 billion per quarter, so buying ARM is about 6 months of work. They could make back some of this premium price by upping royalty fees until the desired sweet spot is reached. In other words high enough to get some vendors to move to Atom or other lesser chips. Or they could just jack up the rates for anything related to a Google phone.
    All is fair in bidness. The govt needs to stay out of this and focus on fixing the banking speculator mess and just leave Apple alone.

  10. Umm, Arm doesn’t just have its feet in smartphone technology. They’re in 90% of ALL Mobile phones, that number maybe more, this is info I have from 2008. Not to mention they’re used in practically every other device that requires semi-advance computing power. Crack open your calculator there’s likely a ARM based chip made by one of the many licensees there, got an ipod/ipod touch, or ANY other media player, it’s got ARM technology in it. Oh and Nintendo’s DS also use ARM based chips to run it. Hell my Canon DSLRs use ARM chips as part of DIGIC.

    If Apple got this in their iPants it could be a bad day for everyone. Alternatively they could just buy it and do nothing, if so good for them.

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