Sunday, 27 September 2020

Nvidia may be close to buying Arm, but is it a good idea?

by Harry Baldock, Total Telecom
Tuesday 04 August 20

The co-founder of the UK chip company has said such a purchase could be a ‘disaster’

Over the weekend, it was reported that Nvidia was in talks with SoftBank for the purchase of UK chip-maker Arm.  Such a purchase, valued at around $55 billion, would see Nvidia solidify its position ahead of rival Intel as the 'world’s most valuable chip-maker'.   SoftBank themselves first purchased the UK business for $32 billion in 2016…

Over the weekend, it was reported that Nvidia was in talks with SoftBank for the purchase of UK chip-maker Arm. 

Such a purchase, valued at around $55 billion, would see Nvidia solidify its position ahead of rival Intel as the 'world’s most valuable chip-maker'.
 
SoftBank themselves first purchased the UK business for $32 billion in 2016, just after the UK referendum, with the magnitude of such a deal being touted as a positive sign for post-Brexit Britain. However, the emergence of the coronavirus has since dealt SoftBank a hard blow, leading it to begin a massive campaign of asset sales to fund share buybacks. Arm was ultimately one of such assets
 
While such a deal would be a huge financial boost for SoftBank, the suitability of Arm as part of Nvidia is up for debate. Speaking to the BBC, Arm co-founder Dr Hermann Hauser argued that the pairing was a poor fit for Arm’s business model.
 
"It's one of the fundamental assumptions of the ARM business model that it can sell to everybody," he said. "The one saving grace about Softbank was that it wasn't a chip company and retained ARM's neutrality. If it becomes part of Nvidia, most of the licensees are competitors of Nvidia, and will of course then look for an alternative to ARM."
 
Instead, Hauser would like to see the UK government step in to make a play for Arm as part of a wider industrial strategy; Hauser cited the government’s recent $500 million investment in OneWeb of an example of the active role they can playing in safeguarding the future of the country’s tech industries. 
 
Nvidia, however, has no such misgivings, with analysts suggesting that the purchase of Arm would give Nvidia a safeguard against the possibility of future Intel or AMD servers are incompatible with its GPUs.
 
As with any deal of this scale, a potential sale of Arm is set to meet with anti-trust scrutiny by regulators; Arm currently sells to Nvidia’s rivals such as Qualcomm and Intel, who will insist on retaining access to Arm’s tech following such a takeover. 
 
 
Also in the news:

 

Since you're here...

...the Telecoms industry is characterised by constant change and evolution. That's why it's crucial for telecoms professionals to keep up-to-date with what is happening. Join 35,000+ of your peers and sign up to our free newsletter service today, to be in the know about what is going on. PLUS, as a member you can submit your own press releases!

See all membership options

Please enable JavaScript to view the comments powered by Disqus.

Newsletter signup

Quickly get on board and up to date with the telecoms industry