Huawei is currently struggling to come up with an alternative to Google’s Android operating system and apps as it is shut out of US technology, but it now faces a deeper hardware problem as well, with Chinese tech companies including its own HiSilicon chip unit forced to look for another option rather than Arm’s core chip designs.

The decision by SoftBank to sell Arm to Nvidia for $40bn would put the Switzerland of semiconductors in American hands, inevitably creating fears that the US will limit export of its products in future. Chinese companies need a back-up chip architecture, as do Nvidia’s US rivals, and Risc-V is Arm’s obvious replacement.

This open-source chip design effort still has a long way to go to match Arm’s capabilities, reports Richard Waters. It has yet to advance beyond low-value chips, but industry experts expect it will now attract a wave of investment from companies seeking an alternative to Nvidia. The largest Arm customers will eventually switch to designing their own chip architectures to ensure control of their technology, one analyst predicted.

There are many other aspects to this deal, which faces major regulatory hurdles and is expected to take 18 months to complete. The FT View is that the UK government should make sure Nvidia keeps its promises to retain UK jobs, maintain Arm’s Cambridge headquarters and keep Arm’s intellectual property here. 

For SoftBank fans, this is a disappointing exit, which appears to be driven by short-term interests rather than the long-term vision its founder Masayoshi Son espouses. He touted Arm as his “big bet” and “a big opportunity for all of mankind and products used” when he bought the company four years ago. Lex says SoftBank is now receiving slightly less than the £24.3bn ($32bn) it paid then, adjusting for inflation.

Lex: SoftBank/Nvidia

The Internet of (Five) Things

1. Opendoor to make public entrance
SoftBank-backed property group Opendoor is to go public in a deal with a blank-cheque company run by former Facebook executive Chamath Palihapitiya that values the business at $4.8bn. Social Capital Hedosophia II, a so-called special purpose acquisition company (Spac) set up by Mr Palihapitiya, will merge with Opendoor in a cash and stock deal.

2. Sweden’s Klarna heads for US IPO
The Swedish “buy now, pay later” fintech was valued at $11bn today — roughly doubling the figure of a year ago — ahead of a likely US stock market listing. Its CEO tells us a $650m investment round will aid its US expansion. Lex says investors should keep an eye on credit losses at pay-later groups — they almost doubled for Klarna in the first half.

Three charts showing rise of credit losses in 2020, loans to public compared with deposits from public and Fintech startup values rising against MSCI Europe price index and

3. Anti-snooping EU wants to snoop after all
EU law enforcement authorities would be allowed to access end-to-end encrypted communications under plans that set up a potential clash with both technology companies and privacy advocates. The proposal to expand “targeted lawful access” for such data would help an EU crackdown on child abuse networks and other organised crimes, according to a European Commission internal note seen by the Financial Times. 

4. UK prepares for techno-warfare
Defence secretary Ben Wallace has hinted that the UK armed forces would use drones and other forms of autonomous weaponry rather than large troop deployments to fight future wars. “Instead of mass mobilisation, this future force will be about speed, readiness and resilience, operating much more in the newest domains of space, cyber and sub-sea,” he told reporters aboard the navy’s newest warship.

5. Spotify strikes streaming concert deal
After expanding into podcasts, the music streaming service is now looking at live concerts. Spotify has struck a deal with Songkick to promote live streaming events on its app, as they become more popular due to the pandemic. Meanwhile, Laura Noonan has been running virtual marathons.

Tech tools — Apple Watch Series 6

The Apple Watch SE, Series 6, and Series 3 are seen on a laptop computer during a virtual product launch © Bloomberg

As expected, Apple introduced a new Apple Watch line-up and iPad Air at its “Time Flies” event today. The main addition in the Series 6 Watch is a Blood Oxygen sensor that “employs four clusters of green, red, and infrared LEDs, along with the four photodiodes on the back crystal of Apple Watch, to measure light reflected back from blood”. The health feature indicates wellness by measuring how efficiently oxygenated blood is being delivered throughout the body. Other new features include a brighter display in daylight and always-on altimeter. The Series 6 starts at $399 and is available from Friday. The latest operating systems for all of Apple’s devices are available from Wednesday.

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