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Nvidia interested in taking over Arm, says report

by Mark Tyson on 23 July 2020, 10:11

Tags: ARM, NVIDIA (NASDAQ:NVDA), Apple (NASDAQ:AAPL)

Quick Link: HEXUS.net/qaem5z

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Last week it emerged that SoftBank was looking into the full sale, or the listing of Arm on the stock market. Japan's SoftBank acquired Cambridge, UK based Arm for $32 billion in 2016. Arm processors have gained many headlines in recent months; Arm chips will power the world's fastest supercomputer called Fugaku, Apple announced a two year transition period as it moves Macs from x86 to Arm, and the Ampere Altra Max processors with 128 cores were announced.

Now some further juicy details about possible deals have emerged, thanks to Bloomberg reporters and their sources familiar with the matter. First of all it emerges that Apple was approached by SoftBank as a potential bidder for Arm Holdings. The two parties (i.e. SoftBank and Apple) have had preliminary discussions but rumours say that Apple has ruled out a bid.

On the Apple/Arm match up analysts say that Arm's licensing model wouldn't fit comfortably with Apple's hardware and software business. Furthermore, Apple would likely face a strong push back from other Arm architecture processor users, so regulators might take a dim view of such a marriage. Nevertheless, Apple will have a very keen interest in the future of Arm as it has sold more than 2 billion devices featuring custom Arm designs and has pinned its Mac computer's future to the architecture.

So, Apple is out of the frame but Nvidia has reportedly approached SoftBank about its interest in Arm Holdings. The Santa Clara, California-based graphics chip designing company has greatly widened its portfolio in recent years, expanding from gaming into data centre AI processing and smart automotive tech. Nvidia and Arm also have partnered on some big IT projects in recent years, in fields such as Deep Learning and IoT, for example.

The prospect of an Nvidia owned Arm would certainly raise fewer hackles than if Apple went for it, but we don't have much more info about any deal for now, time will tell.

As mentioned in the intro SoftBank splurged $32 billion on Arm Holdings in 2016. Since that time the Philadelphia Stock Exchange Semiconductor Index has rallied 185 per cent, observes Bloomberg, which should provide a baseline for valuing Arm now if it were a middling performance tech company. In the same period, however, Nvidia's stock market value has risen eightfold (about $254 billion now), briefly overtaking Intel earlier this month.



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https://www.androidauthority.com/nvidia-arm-1140639/
https://www.bloomberg.com/news/articles/2020-07-22/softbank-s-chip-company-arm-is-said-to-attract-nvidia-interest

Any customer trying to acquire Arm would trigger regulatory scrutiny. Other companies using its technology would likely oppose a deal and demand assurances that a new owner would continue to provide equal access to Arm’s instruction set. Such concerns resulted in a neutral company – SoftBank – buying Arm the last time it was for sale.


I have mixed feelings over this. The problem is Nvidia,doesn't actually have a good history of playing nice with competitors. If anything Apple has a better history if you look at things such as USB,OpenCL,etc.

It also leads to some other problems. ARM has been significantly more sucessful than X86,due to the way its licensed,and more importantly its ease of licensing. You can see this with X86,which is very limited in who can actually design CPUs around it.

The other problem is if ARM becomes US owned it is under US regulatory insight and export restrictions,so far more red tape in licensing designs. Long-term I can see countries moving away from ARM then if there is more red tape around licensing them.I can see open source stuff such as RISC V starting to gain more traction. OFC our lot allowed ARM to become foreign owned,just like Imagination Technologies. Softbank is already going to keep some parts of ARM,so another UK based company is slowly being broken up into smaller and smaller pieces as it passed from one owner to another.
On the surface that makes huge sense for Nvidia who have been wanting to profit from the mobile industry for such a long time.

Surprised at Apple, who generally seem happy to profit from bought up patent portfolios. They could fund an ARM purchase and let the company run stand-alone as it always used to and just siphon off some profits.
DanceswithUnix
On the surface that makes huge sense for Nvidia who have been wanting to profit from the mobile industry for such a long time.

Surprised at Apple, who generally seem happy to profit from bought up patent portfolios. They could fund an ARM purchase and let the company run stand-alone as it always used to and just siphon off some profits.

Both companies are not neutral though,so the issue is whether either should be allowed to have controlling shares in a company,which licenses designs WORLDWIDE. Also,again one of the parts of the ARM licensing model which countries like,was the ease of licensing designs and IP. The problem is any of these companies buying it will lead to much more red tape. You had this problem with X86 - not only did Intel do everything it could to make it as hard as possible for competitors to use X86(to protect its own vested interests),literally any country who wanted to use X86 had to also go through multiple layers of red tape to allow this to happen. Both Apple and Nvidia have vested interests. Softbank didn't.

So in the end,ARM gained traction since the licensing model was far less restricted by multiple reasons. It is why it might eventually end up breaking the ARM monopoly on mobile designs.
CAT-THE-FIFTH
If anything Apple has a better history if you look at things such as USB,OpenCL,etc.

USB was an Intel creation. Apple's version was Firewire, the technically better alternative that was killed off by expensive licence fees to use it. So Firewire and Metal are probably more representative.


CAT-THE-FIFTH
Both companies are not neutral though,so the issue is whether either should be allowed to have controlling shares in a company,which licenses designs WORLDWIDE. Also,again one of the parts of the ARM licensing model which countries like,was the ease of licensing designs and IP. The problem is any of these companies buying it will lead to much more red tape. You had this problem with X86 - not only did Intel do everything it could to make it as hard as possible for competitors to use X86(to protect its own vested interests),literally any country who wanted to use X86 had to also go through multiple layers of red tape to allow this to happen. Both Apple and Nvidia have vested interests. Softbank didn't.

So in the end,ARM gained traction since the licensing model was far less restricted by multiple reasons. It is why it might eventually end up breaking the ARM monopoly on mobile designs.

I can see upsides and downsides to both. I mainly just hope that Intel aren't bidding.

Much though I generally dislike Apple, I could see here that Apple have a lot of skin in this game, so could just buy ARM to protect themselves and any profit made a happy bonus. There is nothing to stop them having an ARM subsidiary based in Cambridge operating as a UK company if they wanted to distance themselves but buy control over ARM being used against them.

Nvidia will likely use ARM as a stick with which to beat Intel, because what Nvidia really want is an x86 licence. As you say, that isn't something that Intel will allow any more and Intel try quite hard to make the historic licence agreements go away. So Nvidia tried to go the ARM route, but Tegra wasn't the biggest of successes with the largest companies in the sector (Samsung and Apple) having their own SoC divisions and not being interested.

Both Nvidia and Apple have decent ARM design teams.

Or, Intel could buy ARM and use it as a stick to beat Nvidia. If there were no ARM left at the end of using it as a blunt instrument, then that would be fine by Intel.
Yes, both Apple and Nvidia are about the worst companies at sharing stuff so if either of them ends up as the owner, I'd guess RISC-V is going to get a lot traction out of this!

Kind of ironic that Apple don't like Nvidia as they're very similar. Guess Nvidia wiggling out of proper support for the bumpgate defects went down very badly with Apple (who despite their often poor warranty support now, were about the only OEM who actually tried to fix their customers bumpgate affected parts and sometimes ended replacing motherboards multiple time - presumably because Nvidia had told them that certain batches were now ‘fixed’).

And the whole US ownership thing is another issue. The recent Trump-tantrum pretty much shows why most state actors want their own CPU or at least one not under the whim of the US. HiSilcon rose out of nowhere to pretty much one of the most important ARM vendors. Guess they'll be going RISC-V or MIPS now.