The Stiffest of Strongarms

Yesterday, the BBC got its hands on a leaked memo from British chip designer ARM Holdings telling staff it’s suspending business with Huawei. The move, a direct result of the White House-led trade/tech crackdown on Huawei, is bad news for the embattled company.

In the West’s orbit

ARM’s headquartered in the U.K. but has eight offices and over 1,400 employees scattered across the U.S. The company memo said ARM component designs have “U.S. origin technology”—Texas and California, for example.

• What this means: Since ARM doesn’t fall under the U.S.’ 90-day reprieve of some Huawei restrictions, it’s clear the U.S.’ export ban is reverberating across the Atlantic.

ARM is in your arm

You may not have heard of ARM until today, but its licensed tech is in the smartphones, intelligent sensors, and connected cars all around you.

Think of it like this: ARM is the George R.R. Martin of chips. It's the brainiac that designs the blueprints and writes the instructions for efficient, high-powered microprocessors. Chipmakers then run the capital-intensive foundries that build and install them.

• ARM licenses its designs upfront to clients like Apple, Samsung, Nvidia, and Qualcomm and reaps the royalty rewards.
• It has a stronghold in the mobile processing device space. According to Nikkei, its tech can be found in over 90% of mobile devices.

Bad news bears

Without ARM’s designs and IP, Huawei can’t build smartphones. Many companies can build chips, but there’s only one GRRM of chip designs (and it’s ARM).

Where we are: This is a bigger deal than the Android ban on Huawei. If ARM’s policy isn’t reversed or revised—a big if, since we all know how fast things move in 2019’s tech cold wars—it could be a death blow to Huawei. The R&D required to replace the foreign chipmakers Huawei relies on would take years...and obscene amounts of money.