Under normal circumstances, US tech giant Nvidia's takeover of British chip designer Arm for US$40 billion (£29 billion) would have sailed through without registering beyond the computing industry. Instead, it has made international headlines, with UK and EU monopolies regulators launching an in-depth investigation after outcry from competitors.
In effect, the deal is pretty much dead before it starts. At the heart of this lies a row about technological sovereignty. So what is going on?
[...] The biggest pushback, behind the scenes, actually appears to be from China. Ever since the US blacklisted Huawei and other semiconductor manufacturers in China, Beijing has been obsessed with becoming technically "self-sufficient".
While it works towards this goal, Arm has continued to license its chip architectures to Huawei. Arm claims that its chip technology is of British origin and therefore does not breach the US restrictions on exporting tech to a group of blacklisted Chinese companies. Thanks to this ongoing arrangement, Arm is one of the remaining enablers for China's semiconductor sector to keep pace with the outside world.
We had two submissions about this just-announced story.
Nvidia to buy Arm Holdings From SoftBank for $40 Billion
Chipmaker Nvidia has agreed to buy Arm Holdings, a designer of chips for mobile phones, from SoftBank in a deal worth $40 billion, the companies announced Sunday. The deal will include $21.5 billion in Nvidia stock and $12 billion in cash, including $2 billion payable at signing.
Softbank acquired Arm in 2016 for $31.4 billion in 2016 in one of its largest acquisitions ever. Arm is best known as the designer of an architecture used in chips in most mobile phones, including the Qualcomm chips used in most Android phones, as well as Apple's iPhone. Apple is also planning to shift its Mac computers from Intel chips to an Arm-based design.
Nvidia, whose chips are widely used to support graphics and artificial intelligence applications, including for self-driving vehicles, pledged that it would "continue Arm's open-licensing model and customer neutrality."
Interest in RISC-V set to skyrocket again.
According to comments from Nvidia CEO Jensen Huang during a conference call yesterday, we could see Nvidia-branded CPUs in the future, setting the stage for a new level of competition with Intel and AMD.
[...] However, during yesterday's briefing, Timothy Prickett Morgan from TheNextPlatform asked Jensen Huang, "Will you actually take an implementation of something like Neoverse first and make an Nvidia-branded CPU to drive it into the data center? Will you actually make the reference chip for those who just want it and actually help them run it?"
"Well, the first of all you've made an amazing observation, which is all three options are possible," Huang responded, "[...] So now with our backing and Arm's serious backing, the world can stand on that foundation and realize that they can build server CPUs. Now, some people would like to license the cores and build a CPU themselves. Some people may decide to license the cores and ask us to build those CPUs or modify ours."
"It is not possible for one company to build every single version of them," Huang continued, "but we will have the entire network of partners around Arm that can take the architectures we come up with and depending on what's best for them, whether licensing the core, having a semi-custom chip made, or having a chip that we made, any of those any of those options are available. Any of those options are available, we're open for business and we would like the ecosystem to be as rich as possible, with as many options as possible."
The European Commission (EC) this week extended its probe of Nvidia's proposed acquisition of Arm until at least October 27 and said that Nvidia offered the EU certain concessions to[sic] in a bid to persuade the bloc's antimonopoly regulators to approve the deal. Experts say that the EU regulatory review will take considerably longer.
In a bid to make regulators approve the deal to acquire Arm, Nvidia is eager to offer various incentives to respective countries or blocs. In the U.K., the company proposed to invest 'at least' $100 million in the country's most powerful supercomputer. The EC said that it had received concessions proposal from Nvidia as well, but did not elaborate, reports Bloomberg.
Now that the probe is formally extended to October 27, the EU competition authority will request opinion from competitors and clients before determining whether to accept Nvidia's concessions, demand more or initiate a four-month long investigation, reports Reuters. Bloomberg believes that the probe will be extended further, which will give the EC some additional time to seek feedback from interested parties and figure out what it might get from Nvidia.
Also at Notebookcheck.
NVIDIA is now facing the most stringent test yet to its planned acquisition of the chip designer Arm Holdings.
To wit, the US FTC is now suing NVIDIA to block the $40 billion deal. FTC Bureau of Competition Director, Holly Vedova, said in a statement:
"The FTC is suing to block the largest semiconductor chip merger in history to prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies."
Vedova went on to note:
"Tomorrow's technologies depend on preserving today's competitive, cutting-edge chip markets. This proposed deal would distort Arm's incentives in chip markets and allow the combined firm to unfairly undermine Nvidia's rivals."
NVIDIA faced strong opposition from regulatory bodies in their bid to purchase ARM Holdings, a British company owning the IP of its RISC (reduced instruction set computer) architectures. After numerous attempts to convince the market and governments that could oppose such a transaction, NVIDIA has allegedly given up the plans, which means that it will have to mark a $1.25 billion loss, money that should be considered a breakup fee.
NVIDIA's original plan was to pay 40 billion USD for the company. However, the US chipmaker no longer expects this transaction to close.
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