Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

ARM Holdings Plc used to be independent.

"There aren't any poison pills in our contracts, but in a sense the whole business model is a sort of poison pill in that it works best by being fiercely independent, not owned by anybody."

That was ARM's then-President Tudor Brown, speaking to Reuters in 2010 about why it wouldn't make sense for the U.K. chipmaker to be bought by Apple Inc. Brown and other executives recited the same argument for many years when asked about possible takeovers by companies including the likes of Intel Corp.

Well Timed
SoftBank's disclosure of a stake in Nvidia comes as the shares have rallied this year
Source: Bloomberg

This poison pill didn't apply when SoftBank Group Corp. bid for ARM last year because the Japanese company wasn't a semiconductor player.

SoftBank revealed last weekend that it had taken a stake in graphics chipmaker Nvidia Corp., but it wasn't until Bloomberg's Ian King dug further that we understood the scale. SoftBank isn't dabbling here: It paid as much as $4 billion to secure 4.9 percent, coming right up to the line at which it would need to make regulatory disclosures, King reported.

Rising royalties from chip clients are at the heart of ARM's business model
Source: ARM

While we don't know when SoftBank built its stake in Nvidia, this ought to ring alarm bells for investors and clients. Santa Clara, California-based Nvidia is a client of ARM. The English company gets an upfront license fee from customers then ongoing royalties based on how much product is made using ARM's technology. It also works with customers on product development. 

That gives ARM a unique vantage point from which to view the business prospects of its clients. In an investor presentation this month, the company pointed to its strength in understanding the product road map of customers. As an independent entity, that visibility was protected. But ARM isn't independent anymore, and its owner just took a large stake in a major client. (To be clear, there's no evidence or allegation of impropriety.)

The connection runs full circle when you consider that SoftBank manages the Vision Fund, which bears its name and just closed a $93 billion round. Investors in that fund include chipmaker Qualcomm Inc., Apple -- which designs its own chips -- and Mubadala Investment Co., the Abu Dhabi company that owns semiconductor contract manufacturer GlobalFoundries Inc. 

In the space of one year the company founded by Masayoshi Son has gone from a middling telco operator and somewhat decent VC to being the most connected and potentially most influential semiconductor company in the world. 

Let's see how ARM's clients feel about that.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Tim Culpan in Taipei at

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Matthew Brooker at