Intel to acquire ARM – a favorite rumor recycled

Despite the pressure ARM processors place on Intel, a takeover bid would be doomed to failure

Some rumors are so good they just have to be recycled regularly, and Intel buying ARM appears to be one of those, judging by the number of times it comes around. That speculation has arisen again in the UK press, with some newspapers even managing to work in another serial rumor, Apple buying ARM, and talking up a potential bidding war.

Intel is certainly facing challenges from the chipmakers which use the ARM architecture in preference to its own x86. The latter has made halting progress in battery efficient mobile devices, where the highest device growth lies, while ARM designs are starting to impinge on Intel’s portable PC, and even server, strongholds.

Intel could take the humiliation of adopting ARM designs itself to get a boost in mobile, having previously sold its ARM business to Marvell, but CEO Paul Otellini said recently that it had not plans even to use the ARM licence it gained with Infineon Wireless. But the notion of buying the entire company remains incredible.

Of course it would gain control of the architecture and seriously disrupt key rivals like Qualcomm, but it would almost certainly hit massive antitrust problems, since it would place both the leading device silicon platforms under a single control, and it would destroy most of ARM’s value by wrecking its multivendor business model. Even in the unlikely event it was cleared to buy ARM, it would also acquire a complex set of multiyear licensing deals with angry competitors.

Intel would have to pay an estimated £10bn ($16.5bn) for the UK firm, the reports speculate, and more if a rival bidder emerged. The favorite for that role is Apple, which uses ARM-based processors in the iPhone and iPad, and has shared history with ARM, which was originally formed as a joint venture between Apple, Acorn and VLSI, to develop the Acorn Risc chip.

UK newspaper The Daily Telegraph reports ARM CEO Warren East stating the obvious – that an acquisition of the company by a silicon vendor reduce its value, because it “has been built around the principle of being agnostic at every point in the value chain”. East added: “Because of that approach, it means that acquisitions are very difficult. It’s not impossible, but ARM is a very valuable business as it is and a significant part of that value lies in its agnostic approach.”

For Apple, the joy of derailing rivals’ processor or device roadmaps would be quickly outweighed by the need to compete single-handed with x86 and shrink ARM’s target market down to the vendor’s own requirements, plus a few non-competitive partners that might still license the architecture once current contracts expired. Some analysts said Apple would like to own the ARM technology and keep it out of rival gadgets, but that misses the point – it is not the basic ARM core itself that makes a product stand out, but the way this is implemented within an advanced processor, such as Apple’s own A5 and upcoming A6. For those who want to differentiate their processors completely, they can acquire a full architectural licence such as those held by Qualcomm, Marvell, Infineon and a few others.

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