Nvidia could close Arm acquisition deal soon

Chip designer Arm has been on the chopping block for almost a month now as the current owner, Japanese holding company SoftBank, looks to sell it off. Now, the British publication Evening Standard says the acquisition is on course to be complete by “the end of the summer.”

The Standard notes that SoftBank put Arm up for sale back in April. Softbank struggled, especially after its investment in WeWork failed; to recoup costs, hired Goldman Sachs to look for buyers for some of its holdings. The company approached Apple; it then tried to assemble a group of buyers including Nvidia. Now, though, Nvidia is the only interested buyer. According to the Standard, SoftBank is looking for over $50 billion USD. That’s almost double what the firm paid when it acquired Arm in 2016. Other publications put the number closer to the $32 billion SoftBank actually paid.

Arm’s co-founder Tudor Brown told the New Statesman that “[SoftBank] put too much money into it, spent money on things that clearly–in my opinion–weren’t going to make money in the short term, and now suddenly they’re saying ‘oh, dear me, this company isn’t performing well.”

Regulatory Headaches

The deal could cause quite a few headaches. The Standard notes that the British government pushed SoftBank to keep Arm in the UK to preserve its domestic workforce. It’s unclear whether that will continue with Nvidia. The Standard also notes that the UK wants to secure the deal ahead of its European Union exit in 2021. Elsewhere in the world, there’s lots of room for regulatory concerns. As we’ve previously noted, Arm has supplied chip designs and instruction sets for many tech companies. Not just Nvidia, but AMD, Apple, Qualcomm, Samsung, and more. Nvidia owning a company that has business deals with its direct competitors would likely raise regulatory concerns about fair competition.

CPU-maker Nvidia?

With that said, purchasing Arm could give Nvidia a path to make its own SoCs; the company shifted in recent years from a graphics-only focus to moving into datacenters with HPC GPUs, as well as making moves in artificial intelligence and automobile control. One space it can’t currently compete with AMD or Intel is in the CPU space. An Arm acquisition could let Nvidia worm its way into all kinds of devices, from game consoles (both the Xbox Series X and PlayStation 5 are based on AMD’s Zen 3 and RDNA 2 architectures) to smartphones, and more. Apple announced a shift to Arm-based CPUs earlier this year–is it that hard to imagine Nvidia releasing a laptop powered by its own Arm-based chips, especially as Microsoft is actively working on getting Windows running on Arm?

This seems like it’ll be a fast-moving deal–right up until it gets hung up in regulatory talks.

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Q-God
Q-God
7 months ago

nV will make CPUs like intel makes GPUs.

Adnan
Adnan
8 months ago

CPU and GPU under the same roof opens a lot of possibilities for nVidia. Think consoles, PCs, laptops, smartphones, all of them nVidia branded.

Corrado
Corrado
7 months ago
Reply to  Adnan

But they already did that… with Tegra. And it didn’t work out so great. I’m not sure if its because it was expensive since nVidia also had to pay for the CPU license part of it and now they won’t, but I can’t imagine they’d save $30-50Billion over the short term to make it worthwhile.

Adnan
Adnan
7 months ago
Reply to  Corrado

Yup. Tegra sucks because nVidia didn’t commit to making it successful (unlike some companies like Microsoft who refuse to quit).

Corrado
Corrado
8 months ago

I think the biggest thing is… what, exactly, does nVidia want with ARM? There’s going to be regulatory licensing agreements that force them to continue to license it. I read an article this morning that SoftBank started trying to squeeze licensees for more per-device or upfront fees and some of the smaller ones said “Nah, we’ll just make RISC-V chips instead.” I’m just not sure what nVidia is really hoping to get out of the deal. They already have an ARM license and make chips for Nintendo and …. themselves, sorta I guess still? Does anything still use Tegra chips… Read more »

Casual Visitor
Casual Visitor
7 months ago
Reply to  Corrado

Potential scenario here:
Company A: “We are making a device that needs to be small, and we want an ARM CPU, and we’ll add a separate GPU chip to the design, requiring more power and space to the design overall.”
Nvidia: “Okay cool. By the way, we can supply an ARM CPU with an integrated, power efficient, capable Nvidia GPU, saving you space and power consumption.”
Company A: “Oh! Nice, well, we’ll take that for the slightly higher cost per CPU.”
Nvidia: *grins*

Corrado
Corrado
7 months ago
Reply to  Casual Visitor

It could be, but ARM already had Mali GPUs that simply bolt on and fill the market from low end to high end.

Adnan
Adnan
7 months ago
Reply to  Corrado

Apple has enough experienced designers to create their own ISA if need be. Ditto for Google. If nVidia thinks it can squeeze more money out of existing licensees, it won’t work long term. Heck, all the licensees could just pool their resources and design an open source ISA.

The lost cat
The lost cat
7 months ago
Reply to  Adnan

Some of them are already jumping ship to RISC-V. I can’t see an NVIDIA buy making sense long term.

chuckula
chuckula
8 months ago

For all the hype about ARM what people tend to forget is that it never really made much money. The last year that has public information available (2017) lists ARM’s revenue as 152.42 billion…. Yen. Converted to dollars at present exchange rates that’s $1.44 billion in annual revenue. The net annual profits were only about $300 million.   By comparison, even AMD in 2017 when it was just starting to launch products and still wasn’t making much money reported topline annual revenue of $5.3 Billion dollars and a net income of $179 million. Once again, remember that this is 2017… Read more »

Matt
Matt
8 months ago
Reply to  chuckula

Last year ARM’s revenue was about $2 billion and they lost $400 to $500 million. The year before that they made over a billion dollars, but only because of a one-tiome sale of IP rights when forming their ARM China joint venture in China, which they are a minority shareholder in (as is the standard practice for China to force onto foreign companies that wish to compete in China).   The point is that ARM, as it operates now, is failing. People who are crying “keep ARM independent” haven’t come to terms with that fact. They will be losing “their”… Read more »

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