Rene Haas, the brand new CEO of Arm of fewer than 12 hours, addressed his company’s present mission upon the end of the 17-month bid by Nvidia to buy Arm, announced on Tuesday. Arm will also seek an IPO within the next year.
“While we are discouraged the acquisition did not go through…we are very excited about the future going forward,” he told reporters in a conference call. “I have never been more excited about what’s in front of us…It’s a limitless future.”
Arm’s focus will be primarily on hyperscaler, cloud, IoT, automotive and the Metaverse, he said, but added, “we have other things up our sleeves” to be revealed later. “That’s one of the fun things about Arm: there’s not a technology space that we cannot participate in.”
Arm’s earlier contributions to power-efficient chip designs for smartphones will have bearing on upcoming technologies, everything from data center to AR and VR glasses. “We are in the early days of AR and VR glasses which are compute intensive and need great battery life and a broad suite of apps, and that’s about a broad developer community,” Haas said.
Speaking of which, Arm counts 15 million developers in its software development ecosystem with 10 million Arms-based apps that run on every major OS.
Nvidia and SoftBank, owner of Arm, blamed “significant regulatory challenges” for the breakup of the deal, which Haas called a regulatory climate “that’s gotten quite challenging.”
Nvidia will pay SoftBank a $1.25 billion breakup fee and will retain its 20-year Arm license. Haas refused to discuss terms of the Nvidia license or whether the deal termination will have any impact on the license terms.
Haas also deflected a reporter’s question about taking the IPO route for Arm under SoftBank’s ownership, in light of CEO predecessor Simon Segars’ earlier public comment that an IPO would “suffocate Arm’s ability to innovate.” Haas responded to the question by saying, “Arm’s revenues have never been better…We are well positioned going forward.”
Arm’s revenues for fiscal year 2021 ending March 31 are forecast to be $2.5 billion, up from nearly $2 billion for the prior year.
Segars had promoted the Nvidia merger since September 2020, partly because of the potential access to cash that Nvidia offered for research and expansion opportunities. Despite his strong support for the merger, Segars appears to have left Arm on good terms, saying in a statement, “I’m very bullish on Arm’s future success under Rene’s leadership and can’t think of anyone better to lead the company through its next chapter.”
While Segars spent 30 years at Arm, moving from graduate engineer to CEO, Haas has been president of the Arm IP Products Group since 2017 after first joining Arm in 2013. Haas said he plans to continue to reside in San Jose, California, with plenty of travel to Cambridge, England, where Arm is based.
Arm currently has 6,400 employees, including about 5,200 engineers. Asked if the headcount of engineers would change with the Arm’s focus on an IPO, Haas said, “you can never have enough engineers.”
Inder Singh, CFO at Arm who was also on the call with reporters, agreed and said, “We’ll always need more and more engineers.” But then Singh added, “We are going to be very prudent. G & A (General and Administrative Expenses) is our focus area, not engineering.”
Both Singh and Haas said partners and licensees of Arm’s IP have been pleased, at least initially, that the Nvidia purchase has ended. Licensee demand has been strong over the past year, Singh added. Several major competitors to Nvidia had reportedly opposed the acquisition, including Qualcomm, Microsoft and Google.
Some in the technology field supported the acquisition, however, including technology analyst Patrick Moorhead at Moor Insights & Strategy. He said the end of the deal was unfortunate because it would have brought more competition to the PC and server market.
“I think an NVIDIA-Arm combination deal would bring more competition that is dominated 99% by Intel and AMD,” he said after the deal ended via email.
“My only opinion that changed was that Arm has the capability to be a viable business and invest as it is much more profitable than I imagined.” He pointed to the $2.5 billion revenue forecast for fiscal 2021 and $900 million in adjusted EBITDA.
Nvidia shares were down 9% over the past month, to $248.62 as of 2 p.m. EST on Tuesday. SoftBank shares were up slightly over the past month to $23.42.
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