Tech Tent: ARM, TikTok and the battle for tech supremacy

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By Rory Cellan-Jones
Technology correspondent

Donald Trump, outlined in white in a cutout, points to a TikTok logo against a backdrop of many TikTok video thumbnails from the #SaveTikTok tag

picture copyrightGetty Images

One has been described because the Switzerland of the chip business, the opposite is the most popular new social media phenomenon of current years.

But each ARM and TikTok are discovering themselves buffeted by the crosswinds of the commerce conflict between the United States and China, and this week’s Tech Tent seems at what that may imply for each firms.

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When America’s Nvidia and Japan’s Softbank revealed that they had brokered a $40bn (£31bn) deal to see the chip big purchase ARM, there was consternation within the UK tech business.

Cambridge-based ARM designs chips for many of the world’s cellphones and plenty of different gadgets, and might be essentially the most spectacular tech enterprise that Britain has produced within the final 30 years.

Even although it was offered to Softbank in 2016, the Japanese agency saved its promise to retain its Cambridge headquarters and increase jobs and funding within the UK. But ARM co-founder Hermann Hauser says a sale to Nvidia will likely be a catastrophe – he believes it’s inevitable the brand new proprietor will need to run the enterprise from the United States, with dire penalties for employment in locations like Cambridge.

Whatever the considerations within the UK, this deal has raised questions all over the world about what it’s going to do to the steadiness of energy within the chip business which is on the centre of our expertise future.

media captionWATCH: Nvidia chief explains why he desires to purchase ARM

ARM’s enterprise mannequin is dependent upon the belief of greater than 500 clients who license its chip expertise within the perception they may every get equal entry to improvements. That’s why Hermann Hauser calls it the Switzerland of the chip world and why he fears the corporate will lose that belief as soon as it’s within the palms of Nvidia, which has overtaken Intel to develop into the largest cheese within the business.

Analyst Geoff Blaber, of CCS Insight, tells Tech Tent he agrees with that prognosis.

“The fact that ARM has been independent has meant that a whole swathe of licensees has been comfortable using its technology,” he says.

“The moment that goes to a competitor, that does risk being compromised.”

Nvidia chief government Jensen Huang informed us he cherished ARM’s enterprise mannequin and expects to supply extra of his firm’s improvements to its clients.

“The business we bought is a combination of the people, the incredible architecture and the business model that led to this rich ecosystem that ARM represents today,” he stated.

He insists most of ARM’s clients usually are not direct rivals of Nvidia so shouldn’t be apprehensive.

But Geoff Blaber isn’t satisfied – he says historical past reveals {that a} licensing enterprise that has two competing pursuits, serving its licensees whereas additionally pushing its personal merchandise, hardly ever works.

“The moment those licensees start to see a long-term threat or opposition against their core business, they’re going to start looking at alternatives.”

This deal additionally faces some main regulatory hurdles – even Jensen Huang concedes it’s going to take greater than a yr to tie issues up.

‘Status quo’

But the massive query is about approval from China, a significant buyer of ARM. At a time when the United States has moved to close off Huawei’s entry to any Western chip expertise, the Chinese authorities is not going to be comfortable to see an important a part of the semiconductor ecosystem come beneath the management of an American firm which can should obey diktats from Washington.

“They have a vested interest in keeping the status quo,” says Geoff Blaber.

“I’d be very surprised if the deal, as it’s been proposed, would get through scrutiny from China and the regulator there.”

Meanwhile the Trump administration has been decided to make sure the United States has a measure of management over TikTok, a much less very important a part of the tech ecosystem, although do not say that to the tons of of thousands and thousands of youngsters who adore it.

At the time of writing, it nonetheless isn’t clear whether or not the US or China will likely be glad with a deal which might see the enterprise software program managing the info from the video platform whereas not fully shutting the Chinese house owners out.

But on this contest between the 2 tech superpowers, TikTok is simply the appetiser. The way forward for ARM, the platform on which a lot of the way forward for computing is being constructed, is the primary course.

Related Topics

  • TikTok

  • ARM Holdings

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