Another reason why the Apple/ARM takeover rumor never made sense

Fri, Apr 23, 2010


Earlier this week, a flash rumor that Apple was toying with the idea of purchasing ARM Holdings for an estimated $8.1 billion sprung up out of nowhere. Shares of ARM Holdings subsequently skyrocketed before ARM CEO Warren East put to rest a rumor that never really made much sense to begin with.

With Apple already having access to ARM’s chip designs, there’s not much of an upside to Apple purchasing the company. Some, though, theorized that if Apple acquired ARM, they could refuse to license out their newly purchased chip designs to competitors – a move that would undoubtedly expose Apple to regulatory scrutiny.

But monopolistic arguments aside, Ars Technica raises another good point, namely that Apple couldn’t legally terminate existing and long term licensing contracts a number of companies have already signed with ARM, thus making a hypothetical ARM purchase even more fruitless for Apple.

All of the big and medium-sized players who want ARM licenses already have them. If Apple bought ARM, they could refuse to grant new licenses, but they couldn’t just magically revoke all of the existing licenses. Samsung, Qualcomm, NVIDIA, TI, and everyone else in the ARM ecosystem all have ARM-based roadmaps that go out for many years, and all of the products on those roadmaps are based on licenses that Apple can’t just unilaterally invalidate. So if Apple did buy ARM, we’d still see a healthy stream of non-Apple ARM products coming to market over the next five years. And while the massive ARM ecosystem pipeline empties out, chipmakers would have plenty of time to switch to an alternative low-power architecture like the venerable and still-popular MIPS.


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