Qualcomm says it would be open to investing in Arm

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Jun 14, 2021
  • Qualcomm is open to taking a stake in Arm if it lists on the stock exchange.
  • U.S. tech giants are against Nvidia's potential acquisition of Arm.
  • Nvidia's takeover deal is currently under investigation from multiple regulators.

Qualcomm Inc (NASDAQ: QCOM) said on Monday it would consider investing in Arm if regulators blocked Nvidia from acquiring the UK chip designer for $40 billion (£28.32 billion), according to The Telegraph.

Qualcomm shares opened at $135 in the stock market on Monday versus a low of $123 in early March. In comparison, Qualcomm had started the year 2021 at a per-share price of a higher $149 after closing 2020 with an annual gain of 70%. At the time of writing, it is valued at about $152 billion and has a price to earnings ratio of 19.36.

Arm might go public if Nvidia deal collapses

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If the Nvidia deal fails to secure approval from the regulators, SoftBank (current owner of Arm) is likely to list Arm on the stock exchange. If so, the incoming chief executive of Qualcomm, Cristiano Amon, said the American multinational would definitely like to take a stake in Arm. Qualcomm had posted weaker than expected revenue in its recent fiscal quarter (Q1).

According to Nvidia, however, an initial public offer would be insufficient to support Arm’s growth. According to the Nvidia spokesperson:

“Arm needs an infusion of new technology that it can provide to Arm licensees everywhere, which is why we stepped up and agreed to buy Arm. Our technologies and Qualcomm’s are highly complementary — we’d welcome Qualcomm’s help in creating new technologies and products for the entire Arm ecosystem.”

Tech giants are against Nvidia’s takeover of Arm

Nvidia announced its proposal for Arm in September 2020, and the deal was expected to close in about 18 months. Ever since, giants like Qualcomm, Google, and Microsoft have been opposing the potential takeover, citing the risk that Nvidia will block other companies from using Arm’s chip designs to fully capitalise on the acquisition.

Nvidia, however, has reiterated on numerous occasions that Arm’s open licensing model will be maintained after the completion of the transaction. The Santa Clara-based company also intends to make sizable investments in Arm’s Cambridge headquarters.

The deal is currently under investigation by the UK’s Competition and Markets Authority (CMA), the Federal Trade Commission, China’s State Administration for Market Regulation, and the European Commission. Arm is yet to make an official comment on the news.

The British semiconductor and software design company manufactures energy-efficient chips and licenses its designs to over 500 companies from across the globe. Roughly 95% of smartphones make use of Arm’s chips.

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