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

BBC Technology 18 Sep 2020 03:07

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
image copyrightGetty Images

One has been described as the Switzerland of the chip industry, the other is the hottest new social media phenomenon of recent years.

But both ARM and TikTok are finding themselves buffeted by the crosswinds of the trade war between the United States and China, and this week's Tech Tent looks at what that might mean for both companies.

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When America's Nvidia and Japan's Softbank revealed they had brokered a $40bn (£31bn) deal to see the chip giant acquire ARM, there was consternation in the UK tech industry.

Cambridge-based ARM designs chips for most of the world's mobile phones and many other devices, and is probably the most impressive tech business that Britain has produced in the last 30 years.

Even though it was sold to Softbank in 2016, the Japanese firm kept its promise to retain its Cambridge headquarters and boost jobs and investment in the UK. But ARM co-founder Hermann Hauser says a sale to Nvidia will be a disaster - he believes it is inevitable the new owner will want to run the business from the United States, with dire consequences for employment in places like Cambridge.

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

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

"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 said.

But Geoff Blaber is not convinced - he says history shows that a licensing business that has two competing interests, serving its licensees while also pushing its own products, rarely works.

This deal also faces some major regulatory hurdles - even Jensen Huang concedes it will take more than a year to tie things up.

But the big question is about approval from China, a major customer of ARM. At a time when the United States has moved to shut off Huawei's access to any Western chip technology, the Chinese government will not be happy to see a vital part of the semiconductor ecosystem come under the control of an American company which may have to obey diktats from Washington.

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

At the time of writing, it still is not clear whether the US or China will be satisfied with a deal which would see the enterprise software managing the data from the video platform while not entirely shutting the Chinese owners out.

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