After weeks of rumors, Nvidia announced last night that it was willing to invest $ 40 billion to acquire Arm Limited, better known as the company that designs poor Architecture behind CPUs in virtually every device you use every day.
This shows reports from the last few months. In late July, Bloomberg discovered that Nvidia eyed arm, while also reported that Apple – despite a well-publicized shift arm-based silicon –wasn’t interested. SoftBank, the Japanese telecommunications company that bought Arm for $ 31 billion in 2016, has been hit by the pandemic and Arm’s sale is believed to be an attempt to raise some moolah to make up for it. Under the deal, Nvidia will issue over $ 21.5 billion of shares and $ 12 billion in cash, of which $ 2 billion will be awarded upon signing.
Even so, Arm’s ubiquity has made selling difficult from an antitrust perspective. SoftBank’s purchase of Arm in 2016 went largely under the radar because the company doesn’t make its own devices or sell chips. Virtually any other company interested in buying Arm would have set big regulatory red flags.
How Ars Technica points out that Arm doesn’t make its own chips – it licenses its technology to other companies based on its Arm CPU architecture. Apple, Intel, Samsung, Qualcomm, and Huawei are examples of companies purchasing licenses from Arm. That means it’s a real no-no for Qualcomm, the chip maker already featured in most Android smartphones, as it would mean practically total dominance. Likewise Google wouldn’t be in the running as it’s already under intense antitrust scrutiny – buying Arm would only make it worse when you factor in Google’s dominance due to the Android operating system. Apple might have made sense because of the whole Hullabaloo that is Apple Silicon, and SoftBank did it Conduct preliminary talks with the Cupertino tech giant, but also with as many of its rivals as Arm licensees, it would have been a tough sell.
However, Nvidia is the least controversial processing company Arm could buy. Nvidia also licenses the Arm technology, but GPUs are mainly GPUs. There’s a reason you don’t actually hear about Nvidia when it comes to smartphones. Indeed, the only real external hardware with its Tegra mobile chipset is the Nintendo Switch and the Magic Leap headset that can be real doesn’t really count as a win. However, should the deal go through, Nvidia’s purchase of Arm could mean many major improvements to the Tegra chipset and in theory it could be a good thing for Nintendo.
This deal is huge and will have a huge ripple effect on the industry. Nvidia will not only gain a foothold in the smartphone market practically overnight, but will also position itself as an important player in the fascinating world of data centers. Jensen Huang, CEO of Nvidia, was quoted by both Bloomberg and the New York Times A major priority will be expanding Arm chips for networking and cloud computing – an area in which Intel has a 90% stake.
But tThe Nvidia arm deal isn’t necessarily a given – now isn’t exactly a boom time for large tech mergers. The appeasement of regulators could be a big reason why Nvidia made a commitment in its announcement to keep Arm in the UK and explicitly stated that it feels obliged to keep Arm’s “open licensing model” and at the same time Maintain global customer neutrality, which is fundamental to its success. We’ll have to see whether regulators take Nvidia’s assurances at face value over the next 18 months.