NUVIA, an unintentional Apple silicon spinoff, is purchased by Qualcomm

Today, we indulge in a little kremlinology as we decipher the various meanings of Qualcomm's acquisition of NUVIA, a company founded by Apple alumni, in order to bolster its portfolio of ARM-related technologies.

NUVIA, which was founded in 2019, positioned itself as an ARM-based server CPU chip designer. The executive bio page of the company makes it sound like an accidental Apple spinoff.

• “For nearly a decade, Gerard Williams III was a Senior Director at Apple and Chief CPU Architect, with responsibilities for a range of cutting-edge CPUs and SoCs across a broad range of devices,” says CEO Gerard Williams III.

• “Manu spent eight years at Apple as the lead SoC architect responsible for numerous Apple leading-edge mobile SoCs across a range of devices,” according to co-founder Manu Gulati.
• John Bruno, the third co-founder, worked at Apple for five years "in the company's platform architecture group, where he founded Apple's silicon competitive analysis team."

Intel, ARM, Google (x2), ATI, AMD, Texas Instruments... Impressive backgrounds, made even more so by their other alma mater: Intel, ARM, Google (x2), ATI, AMD, Texas Instruments... With these credentials, the start-up raised $53 million in November 2019 and another $240 million in September 2020 from Peter Thiel of Mithril Capital, Dell, Mayfield, and other major investors.

It wasn't all plain sailing, though. Apple sued CEO Williams soon after NUVIA was founded, alleging that he used his Apple job to start the company, that he tried to recruit Apple engineers, and that he worked on preparations for his new company while still at Apple. NUVIA later sued Apple for attempting to poach its employees and illegally attempting to "suffocate the creation of new technologies" in subsequent legal manoeuvrings. While California law forbids non-compete clauses, they "do not permit an employee to plan and prepare to create a competitive business on company time," according to a judge who refused to dismiss Apple's complaint.

To add to the mystery surrounding this storey, we've learned that Apple employee Anand Shimpi sent Williams multiple messages containing Apple Confidential information. Williams wisely declined Shimpi's request because of his inappropriate behaviour. (I can't help but mention Shimpi's age when he founded the prestigious tech analysis site AnandTech in 1997: 14 years old! Shimpi left his eponymous company seventeen years later, in 2014, to join Apple.)

It defies logic why the talented Shimpi, now in his thirties, became involved in the NUVIA saga when he was well aware of Apple's stringent security measures.

Despite the controversies, Qualcomm, the wireless technology giant, announced in January that it would buy NUVIA for $1.4 billion.

The plot is well-crafted: a strong founding team, a burgeoning industry segment, and well-deserved rewards for well-aligned entrepreneurs and astute investors. Qualcomm, for its part, spins more yarn with praise from its "broad ecosystem of partners," which includes (wait for it) Microsoft, Google, Samsung, Acer, ASUS, Bosch, Continental, General Motors, HMD (also known as Nokia phones), Honor (also known as Huawei), HP, Lenovo, LG Electronics, LG Mobile, One Plus, OPPO, Panasonic, Renault, Sharp, Sony, Vivo, and Xiaomi are just a few of the companies that make smartphones.

As a Monday morning Kremlinologist, I can't help but sift through the details to find the hidden motives.

While the mandatory pablum in partner endorsements reads more like vassals paying tribute to their technological suzerain than praise for the newcomer (NUVIA is mentioned only as an afterthought or not at all, as with Bosch), I'm struck by the ceremonial order: Microsoft first, Google second, and Samsung third. Following that, everyone forms a line in alphabetical order.

Microsoft's support may be the most intriguing. Does that mean more Windows On Arm development and ARM-native Microsoft applications when it says it sees "an amazing opportunity to empower our customers across the Windows ecosystem"? If this occurs, Acer, Asus, HP, and Lenovo will follow suit and release ARM-based products with Qualcomm/NUVIA chips, posing a serious threat to Intel (and AMD).

Furthermore, Microsoft may interpret the NUVIA acquisition as Qualcomm acknowledging the shortcomings of its Snapdragon chips. “Arm benchmarks: Apple silicon outperforms Microsoft's Surface Pro X in early tests,” is a headline Qualcomm (and Microsoft) executives would rather not see. Qualcomm will certainly see Williams and his team as a solution to their performance issues, thanks to their Apple-acquired expertise.

I'm not sure about the $1.4 billion price tag. NUVIA's $240 million investors were not interested in a 5X gain, despite the fact that it was fast and large. The ARM processor market is booming; if my understanding of the venture capital world is correct, NUVIA investors expected a sales price that was inspired by, but not identical to, NVIDIA's $40 billion acquisition of ARM Holdings (a transaction that is being closely scrutinised) We have a hard time reconciling the $1.4B price tag with Qualcomm's broad and bold ambition when we consider the breadth of applications represented by Qualcomm's partners — anything that moves and needs to be connected.

Perhaps the answer can be found in the actuarial calculation of Apples' legal risk. NUVIA's founders and investors hedged their legal costs by docking in Qualcomm's safe harbour — certainty at a lower cost.

There is no mention of the ongoing Apple litigation in Qualcomm's public debate of the NUVIA acquisition. The NUVIA transaction is not mentioned in Qualcomm's most recent quarterly SEC filing, which covers the period ending December 27, 2020. In the next filing, we'll have to look at Legal and Regulatory Proceedings to see whether and how Qualcomm addresses the Apple lawsuit it may have adopted.

Why would Qualcomm take such a chance? Keep in mind that Qualcomm and Apple have been in a legal and public relations battle for years. (The Verge has a handy aggregation of battle reports titled "Patently ridiculous.") The Apple lawsuit may be nothing more than a minor squabble for Qualcomm, as it has been in the past.

We won't be bored, from the effect on the x86 world to seeing how Qualcomm implements its broad and bold ambition to use NUVIA's acquisition to become even more competitive in the world of mobile and connected devices.

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