The Nvidia-ARM rumors we’ve been reporting on for the past few months have culminated in a major announcement: Nvidia will acquire ARM for ~$40B in cash and stock. After the deal, Nvidia will own ARM and SoftBank will be the largest shareholder of Nvidia stock.
The conditions of the deal are reportedly complex and required that SoftBank settle a dispute between Allen Wu, the former CEO of ARM China who claimed to retain legal control of the business unit, and ARM, who steadfastly claimed it had fired him. A spokesperson for Wu told the Financial Times “he remains the chairman of ARM China,” so whether that means the issue is still percolating or that Nvidia is going to retain his services is anyone’s guess.
On the one hand, SoftBank will make money on this deal, at least on paper. It bought ARM for $32B in 2016 and is selling it for $40B in 2020. On the other, Nvidia and ARM were valued roughly equivalently in 2016, while today Team Green has overtaken Intel to become the world’s most valuable chipmaker. It’s an interesting example of how tremendous market success doesn’t always create tremendous revenue. There are far more devices shipped each quarter running on ARM CPUs than x86 chips and GPU shipments per quarter combined, but volume alone doesn’t dictate valuation.
Any deal between Nvidia and ARM is going to face scrutiny from a lot of different angles. Up until now, ARM has been either an independent company or owned by a company outside the semiconductor industry. There’s already tremendous uncertainty about what this deal might mean for competition long-term, and whether Nvidia will seek to exploit its ownership of the ARM IP to its own unique benefit in a way that is harmful to the ISA’s current licensees. According to Nvidia CEO Jensen Huang,
We are joining arms with Arm to create the leading computing company for the age of AI. AI is the most powerful technology force of our time. Learning from data, AI supercomputers can write software no human can. Amazingly, AI software can perceive its environment, infer the best plan, and act intelligently. This new form of software will expand computing to every corner of the globe. Someday, trillions of computers running AI will create a new internet — the internet-of-things — thousands of times bigger than today’s internet-of-people.
In the same letter, Jensen notes that Nvidia will build a “world-class” AI center in Cambridge, where a state-of-the-art ARM-based supercomputer will conduct research.
As part of the deal, SoftBank reversed an earlier plan in which it would have kept ARM’s IoT business for itself. That business unit will be part of the deal with Nvidia, though the GPU manufacturer has reportedly made certain guarantees to the British government regarding the long-term protection of jobs associated with ARM in the UK.
One component of the deal I haven’t seen discussed much is what it could mean for US-China trade relations. Up until now, ARM has agreed to abide by US trade restrictions with China despite not being a US-owned company. Now that ARM will be a US company, access to ARM hardware and IP is a chip the US government could potentially wield at the negotiating table. Conversely, any move by a US company to purchase ARM would likely push the Chinese that much harder towards developing their own homegrown CPU architectures and industry. Nvidia buying ARM also re-centralizes the global processor industry around the United States once more, with both x86 and ARM held by US companies.
Nine days ago, Reuters ran a story that the Trump Administration was considering blacklisting mainland China’s most advanced semiconductor manufacturer, the Semiconductor Manufacturing International Corporation (SMIC). Currently, SMIC is several generations behind chips produced by TSMC or Samsung. There is, to be clear, no evidence that SoftBank’s sale of ARM is being pushed forward by the Trump Administration. The loud way TikTok is being handled also suggests that the government is unlikely to use back channels to promote sensitive ideas. But while Nvidia buying ARM may not be a goal of the government, it still changes the balance of power across the semiconductor industry.
We expect Nvidia to unveil plans for how it will deal with regulatory concerns and make certain ARM’s existing customers retain uninterrupted access to IP and do not fear being blocked out of future access to processor designs. The truth is, Nvidia has never been the nexus of such a vast, sprawling ecosystem as what it would effectively inherit upon purchasing ARM. The regulatory questions as to how the company will approach that responsibility are not unreasonable, but Nvidia is capable of addressing those concerns.
Now Read:
- ARM Co-Founder: Sale to Nvidia Would Be a Disaster
- TSMC, Foxconn Reportedly Possibly Interested in ARM Acquisition
- Nvidia in Advanced Talks to Buy ARM, Upend Silicon Industry
No comments:
Post a Comment