Why the loss of ARM would be a big blow for Huawei

The British company, which designs chips for all the world’s smartphones and tech, has decided to limit or stop working with the Chinese telecom giant. This could pose serious difficulties.

ARM is not known to the general public. And yet, its activity is essential in the world of new technologies. The UK-based company, which has 6,000 employees and eight research centers in the United States, designs semiconductors for the entire telecom industry. It does not directly produce processors, but its licenses are used by all major groups, like the American Qualcomm, the South Korean Samsung and, of course, Huawei. Its know-how is found in almost all smartphones and tablets. Clearly, it is a player today indispensable on the market.

But according to the BBC, ARM has taken steps to limit or even stop its relationship with Huawei. The group, whose technologies use elements of American origin, has asked its employees to suspend all its current contracts with the Chinese group. At AFP, the company said it wanted to “comply with all the latest regulations decided by the US administration.” Last week, Washington decided to block Huawei’s access to US technologies. Since then, several groups in Uncle Sam’s country, including Google and semiconductor manufacturers like Qualcomm, have decided to stop trading with the Chinese champion of telecom equipment and smartphones.

“ARM is just irreplaceable”
For many observers, an end to ARM’s cooperation with Huawei could be devastating for Huawei. Founder of US research firm Techsponential, Avi Greengart does not go far wrong. In his eyes, “ARM is just irreplaceable”. “Global processors are all made according to ARM’s design,” he continues. ARM sells its licenses to everyone. Without ARM, many believe it will be extremely difficult for Huawei to stay in the forefront of smartphones.

ARM was bought in 2016 by the Japanese telecom giant Softbank. To afford the designer chips for smartphones, the Japanese group did not hesitate to break the piggy bank: he spent the equivalent of 29 billion euros. At the time, Masayoshi Son, the boss of Softbank, justified the purchase arguing that ARM was well positioned to seize the opportunities of the Internet of Things.

Note that Softbank is also the owner of the US operator Sprint. In addition, Masayochi Son is deemed close to Donald Trump. He has never ceased to caress him in the direction of the hair since his arrival at the White House. He was one of the first big bosses to publicly congratulate the US President on his election, while promising him huge investments in the country of Uncle Sam. Very media outlets, which were perceived as a means of to attract the good graces of Donald Trump. In order to possibly win the green light from the US authorities to achieve the merger of Sprint with his rival T-Mobile US. On Monday, the US regulator of telecoms has also shown support for such a marriage.

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