- There are multiple reports that the NVIDIA-ARM deal is dead, but nothing has been officially announced.
- ARM remaining independent is a good thing for the vitality of the ARM processor market.
This week, the market has been swirling with rumors that NVIDIA is about to drop its proposed $40 billion purchase of ARM. For those of you who do not follow the CPU chip market, ARM is one of the most important companies out there. Nearly every single smartphone uses a variant of ARM’s designs. ARM chips, with their steady architecture, good performance, and excellent power/thermal characteristics, are used in a staggeringly wide array of applications from consumer goods to specialized equipment for vertical industries.
ARM itself does not make or sell chips. ARM designs chips and software for the industry. It then sells its architecture and base designs to a wide variety of companies which, often with ARM’s help, customize their own versions of ARM chips. The two largest companies selling smartphone processors on the ARM design are MediaTek and Qualcomm. Apple’s own chips for its phones and for its latest generation of Macintosh computers are also based on ARM designs. ARM, which is owned by SoftBank, functions essentially as an arms dealer, licensing designs to anyone who can afford them.
Because of its neutral stance, there is very healthy competition for ARM processors. The proposed acquisition by NVIDIA puts ARM’s neutral status at peril, as many of NVIDIA’s rivals license ARM processors. This has raised questions by regulators in the US, the UK, the EU, and China. NVIDIA, for its part, claims it will maintain ARM’s neutrality and not cut rivals off.
There is not yet official word that the deal is dead, as both NVIDIA and SoftBank remain publicly committed. However, it’s clear that the regulatory hurdles would at best drag the deal out longer than either NVIDA or SoftBank can wait and would likely block the deal altogether.
While this might be a disappointment for shareholders in SoftBank and NVIDIA, the truth is that this is for the best. The licensed model has created competition, innovation, and abundance in the market for ARM processors – much like Intel’s inadvertent licensing of its 80286 processor created an entire market for the x86 chips that dominate the market today. There isn’t a real reason to doubt NVIDIA’s intentions today, but over the years, NVIDIA ownership of ARM would inevitably stifle the vibrant market that exists now. At the end of the day, the expected cancelation of this deal will be good for the technology industry as a whole.