You may well have read today about Nvidia's $40bn takeover of ARM Holdings of the United Kingdom from SoftBank, which comes just over four years after the JPY/£ currency-led, opportunistic acquisition was struck by the Japanese firm to acquire the chip designer soon after the Brexit referendum in mid-2016.
"AI is the most powerful technology force of our time and has launched a new wave of computing", said Jensen Huang, founder and CEO of Nvidia in the statement.
Bloomberg reports that "Huang said Nvidia is spending a lot of money for the acquisition and has no incentive to do anything that would cause clients to walk away".
The new deal doesn't affect Arm's existing licensing model.
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The concern is that there would be a conflict of interest since ARM's clients would become dependent on a business with which many also compete for sales. The Japanese company will take a stake of "under 10%" in Nvidia as part of the deal. The company is positioning the acquisition as setting up the next stage of AI computing. 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. Nvidia will spend $21.5 billion on stock purchases, and ARM employees will receive Nvidia shares worth $1.5 billion.
The company was sold to Softbank for $31bn in 2016, with one condition of the sale being that Arm remained headquartered in Cambridge in the UK. Arm, meanwhile, will get even more support for R&D efforts as well as access to NVIDIA's entire suite of products.
Nvidia's most recent quarterlies reveal data centre stuff is now its biggest single segment, overtaking its traditional patch of graphics chips for computers. In the coming years Billions of computers with AI will create a new Internet of Things that is a thousand times bigger than today's Internet of People. While a focus of the call was how NVIDIA could leverage Arm's network to work with manufacturers, Huang left the door open for NVIDIA GPU technology being used in smartphones in the future. Regulatory approval may take as long as 18 months before the transaction is completed and the deal needs sign-offs from U.K., China, the European Union and the US, the companies said.In a move to placate Arm's powerful customers and defuse regulatory concerns, Nvidia said the U.K. company will "continue to operate its open-licensing model while maintaining the global customer neutrality that has been foundational to its success". Companies like Apple, Qualcomm and others rely on licensing ARM technology, so there will be plenty of regulatory scrutiny before the acquisition can be approved.
It's a deal which the man who founded ARM says is a disaster. They either use Arm's designs as the basis of their own chips or license its instruction set, the fundamental code used by processors to communicate with software, for proprietary efforts.The acquisition by Nvidia, also a licensee, is a challenge to that neutrality. The regulatory questions as to how the company will approach that responsibility are not unreasonable, but Nvidia is capable of addressing those concerns.