Nvidia buying ARM for record-breaking $40 billion

Posted:
in General Discussion edited September 2020
After weeks of speculation, Nvidia has announced that it has agreed to buy SoftBank's ARM for $40 billion dollars, making it the largest chip manufacturer deal in history.




The deal was announced late on Sunday evening. Nvidia will pay $12 billion in cash, for ARM, with $2 billion due at deal signing. Nvidia will also need to shell out $21.5 billion in stock. Employees of ARM will get $1.5 billion ion Nvidia stock.

"AI is the most powerful technology force of our time and has launched a new wave of computing," said Jensen Huang, founder and CEO of NVIDIA. "In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today's internet-of-people. Our combination will create a company fabulously positioned for the age of AI."

"This combination has tremendous benefits for both companies, our customers, and the industry," Huang added. "For Arm's ecosystem, the combination will turbocharge Arm's R&D capacity and expand its IP portfolio with NVIDIA's world-leading GPU and AI technology.

ARM will remain in Cambridge, UK. Huang says that the facility will be expanded into a "world-class AI research facility" with the goal of attracting researchers from across the world.

Nvidia is planning on building an AI supercomputer, powered by ARM technologies.

Softbank acquired ARM in 2016 for $32 billion. Softbank CEO Masayoshi Son had been working on the blockbuster deal with a small team of executives, including ARM CEO Simon Segars, CFO Yoshimitsu Goto, Vision Fund CEO Rajeev Misra, and Vision Fund executive Akshay Naheta.

"NVIDIA is the perfect partner for Arm," said Masayoshi Son, chairman and CEO of SoftBank. "Since acquiring Arm, we have honored our commitments and invested heavily in people, technology and R&D, thereby expanding the business into new areas with high growth potential. Joining forces with a world leader in technology innovation creates new and exciting opportunities for Arm. This is a compelling combination that projects Arm, Cambridge and the U.K. to the forefront of some of the most exciting technological innovations of our time and is why SoftBank is excited to invest in Arm's long-term success as a major shareholder in NVIDIA. We look forward to supporting the continued success of the combined business."

While the deal has been approved by the boards of directors of ARM, SoftBank, and Nvidia, the deal isn't final. It still needs to jump regulatory hurdles not just in the US, but in China, The European Union, and the UK as well. The deal may hit regulatory hurdles, as ARM licenses its technology to many other companies, including Apple, AMD, Intel, and Qualcomm, and Nvidia's control over a vital license that its competitors need would raise questions by critics if the deal goes through.

Initial reports on a possible sale of ARM alleged Apple was approached for a potential role in the buyout. As Apple licenses the ARM chip architecture used in its A-series SoCs, it seemed plausible for Apple to have an interest, but report sources suggested it would be a poor fit with the rest of the company's business structure.

While the A-series processor, and Apple Silicon are ARM-based, Apple does not need ARM to exist as an independent entity to advance the processors. In all likelihood, given ARM's sale, Apple will diverge more and more from "vanilla" ARM than it has now, as time progresses.

A purchase of ARM by Nvidia will give the graphics chip producer access to more patents and intellectual property to enhance its own offerings, as well as giving itself more of an opening to move deeper into processor sales.

Nvidia will be providing more information about the deal on Monday evening in a conference call.
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Comments

  • Reply 1 of 57
    elijahgelijahg Posts: 2,311member
    Obviously there are contracts in place, and Apple is rumoured to have a coveted perpetual ARM architectural license (from their acquisition of PA Semi IIRC); but since Apple has thrown their toys out of the pram over nothing w.r.t Nvidia (again) it will be interesting to see if this has any effect on the ARM-based Apple Silicon.
  • Reply 2 of 57
    Apple has recently pulled out of purchasing Mac CPUs from Intel. Apple has repeated experience changing chip vendors (CPU, GPU, and more.) The relationship between Apple and Nvidia has been sour for many years. If Apple needed to, would it be able to pull its chip manufacturing away from ARM too? Just a hypothetical.
    watto_cobra
  • Reply 3 of 57
    F_Kent_DF_Kent_D Posts: 60unconfirmed, member
    elijahg said:
    Obviously there are contracts in place, and Apple is rumoured to have a coveted perpetual ARM architectural license (from their acquisition of PA Semi IIRC); but since Apple has thrown their toys out of the pram over nothing w.r.t Nvidia (again) it will be interesting to see if this has any effect on the ARM-based Apple Silicon.
    Nvidia just got in to benefit from the license fees due by Apple since their announcement to ARM based Apple everything being in the not so distant future. 
    watto_cobra
  • Reply 4 of 57
    Mike WuertheleMike Wuerthele Posts: 6,257administrator
    Apple has recently pulled out of purchasing Mac CPUs from Intel. Apple has repeated experience changing chip vendors (CPU, GPU, and more.) The relationship between Apple and Nvidia has been sour for many years. If Apple needed to, would it be able to pull its chip manufacturing away from ARM too? Just a hypothetical.
    It doesn't need to. Apple has its own chip designers, and TSMC is its foundry. At this point, Apple relies on ARM for nothing. I do expect the Apple Silicon design to migrate further away from ARM as time progresses, though.

    ElijahG basically summarized the ARM/Apple arrangement.
    edited September 2020 cy_starkmanqwerty52GeorgeBMacelijahgwatto_cobrafastasleeprundhvid
  • Reply 5 of 57
    By comparison, Intel's market cap has been hovering over and below $250 billion for two years.
    watto_cobrarundhvid
  • Reply 6 of 57
    Apple has recently pulled out of purchasing Mac CPUs from Intel. Apple has repeated experience changing chip vendors (CPU, GPU, and more.) The relationship between Apple and Nvidia has been sour for many years. If Apple needed to, would it be able to pull its chip manufacturing away from ARM too? Just a hypothetical.
    It doesn't need to. Apple has its own chip designers, and TSMC is its foundry. At this point, Apple relies on ARM for nothing. I do expect the Apple Silicon design to migrate further away from ARM as time progresses, though.

    ElijahG basically summarized the ARM/Apple arrangement.
    Agreed. From this point forward, all Apple has to do is make sure XCode and the APIs target whatever they tell it to.

    In a sense, they can do whatever they want, without having a transition phase hence forth.
    tmaywatto_cobra
  • Reply 7 of 57
    It doesn't need to. Apple has its own chip designers, and TSMC is its foundry. At this point, Apple relies on ARM for nothing. I do expect the Apple Silicon design to migrate further away from ARM as time progresses, though. 
    You keep saying this, but I disagree.  There is a difference between the chip design and the instruction set architecture.  There is absolutely no indication that Apple will deviate with a custom ISA that is not compatible with existing ARM ISA.  Apple is even demonstrating how it can run Linux through virtualization, etc.  They couldn’t do that if they didn’t keep compatibility with ARM ISA.  The A13 is fully ARMv8.4-A compatible. If Apple were to deviate from the ISA, maybe theirs would be a superset of an actual ARM ISA.

    The real question is regarding the nature of Apple’s license.  Does it cover all future versions?  Can nVidia claim ARMv9 is not part of that license?  Unlikely, but that’s the question Apple needs to know.  I’m sure if this were a concern, Apple would have made a bid for ARM themselves.  I am concerned that Apple doesn’t have a good relationship with nVidia.  Hopefully, that’s a non-issue.
    d_2SpamSandwichwatto_cobra
  • Reply 8 of 57
    flydogflydog Posts: 1,005member
    techconc said:
    It doesn't need to. Apple has its own chip designers, and TSMC is its foundry. At this point, Apple relies on ARM for nothing. I do expect the Apple Silicon design to migrate further away from ARM as time progresses, though. 
    You keep saying this, but I disagree.  There is a difference between the chip design and the instruction set architecture.  There is absolutely no indication that Apple will deviate with a custom ISA that is not compatible with existing ARM ISA.  Apple is even demonstrating how it can run Linux through virtualization, etc.  They couldn’t do that if they didn’t keep compatibility with ARM ISA.  The A13 is fully ARMv8.4-A compatible. If Apple were to deviate from the ISA, maybe theirs would be a superset of an actual ARM ISA.

    The real question is regarding the nature of Apple’s license.  Does it cover all future versions?  Can nVidia claim ARMv9 is not part of that license?  Unlikely, but that’s the question Apple needs to know.  I’m sure if this were a concern, Apple would have made a bid for ARM themselves.  I am concerned that Apple doesn’t have a good relationship with nVidia.  Hopefully, that’s a non-issue.
    Nonsense.  Apple doesn’t rely on ARM for design or manufacturing. It has a perpetual license that allow it to design its own chips.
    tmayqwerty52MacProwatto_cobra
  • Reply 9 of 57
    entropysentropys Posts: 3,106member
    It isn’t totally nonsense, although the fear may be groundless. Is Apple’s licence for alll current and future versions of ARM instruction sets?
    what happens if ARM employees are rolled into NVIDEA teams and future versions are called NVIDEA instruction sets?
    techconc
  • Reply 10 of 57
    Unless Nvidia and Qualcomm can produce enough chips using the ARM micro architecture and instruction set architecture ( ISA ) to out gun Intel and AMD for desktops, laptops and servers, this will be a big mistake and SoftBank knows it.  All the big dogs like Apple, have their own micro architecture designs and only license the ISA from ARM.

    Today, Apple has the best and most advanced custom designs by far...

    The Apple CPUs are likely based on the PWRficient POWER PC design from P.A. Semi which Apple acquired in 2008.  The micro architecture design was by Daniel W. Dobberpulh of DEC Alpha and StrongARM fame.   PA Semi initially licensed the POWER PC ISA from IBM but switched to the ARM ISA after Apple bought them.  That design was further enhanced with Apple's purchase of Intrinsity in 2010. 

    From Wikipedia 
    “Intrinsity’s main selling point was its Fast14 technology, a set of design tools implemented in custom EDAsoftware, for using dynamic logic and novel signal encodings to permit greater processor speeds in a given process than naive static design can offer.”

    Here is a PA Semi presentation on the PWRficient processor. 
    tmayelijahgwatto_cobraviclauyycrundhvidFileMakerFeller
  • Reply 11 of 57
    Wow. 

    Kind of shocked. 

    Not at the sale price. 

    At the brazen shamelessness of Nvidia to just put it straight out there that there big goal is to COOPT YOUR COMPUTERS to do their AI and create their internet of things. 

    Scary. 
    qwerty52watto_cobra
  • Reply 12 of 57
    flydog said:
    Nonsense.  Apple doesn’t rely on ARM for design or manufacturing. It has a perpetual license that allow it to design its own chips.
    You either didn’t read or didn’t understand my post as your comment doesn’t address what I actually said.
    watto_cobrarundhvid
  • Reply 13 of 57
    tmaytmay Posts: 5,425member
    techconc said:
    flydog said:
    Nonsense.  Apple doesn’t rely on ARM for design or manufacturing. It has a perpetual license that allow it to design its own chips.
    You either didn’t read or didn’t understand my post as your comment doesn’t address what I actually said.  

    By definition, a perpetual license for the ISA would cover all future versions, and while ARM may very well have a maintenance fee structure in place with Apple to maintain that license in perpetuity, it is more likely that Apple negotiated and paid a lump sum for that perpetual license.

    Apple has deviated from the ISA at least since the A7 SOC, and again by definition, Apple would have created a superset of the ISA, which would be proprietary to Apple. I can't imagine that this would have any noticeable impact on the virtualization of Linux. though it might require some small effort.

    It is conceivable that in the future, Nvidia might attempt to increase licensing fees "unreasonably", or deprecate all external licensing, leading to a hellscape of legal jeopardy, which would ultimately lead, I suspect, to an external caretaker that would take over management of the ARM operation. That seems unlikely to happen.

    Again, by definition, Apple would have guarantees and penalties written into any contracts that they would have enjoined with ARM. That's what Apple's legal department is for.

    edited September 2020 GG1watto_cobrarundhvid
  • Reply 14 of 57
    Wow. 

    Kind of shocked. 

    Not at the sale price. 

    At the brazen shamelessness of Nvidia to just put it straight out there that there big goal is to COOPT YOUR COMPUTERS to do their AI and create their internet of things. 

    Scary. 
    Yes, and knowing, that Nvidia is in China’s hands, it makes it more scary
    razorpitwatto_cobra
  • Reply 15 of 57
    As is often the case, the comments literally double the value of the article. However the diversity of opinions makes me think of the old adage, "A man with one watch knows what time it is, but a man with two watches is never sure."

    I'm also starting to worry about this statement:
    "AI is the most powerful technology force of our time and has launched a new wave of computing," said Jensen Huang, founder and CEO of NVIDIA. "In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today's internet-of-people. Our combination will create a company fabulously positioned for the age of AI."

    Are they really saying that their future chips sold to us will be running Nvidia's AI software even when we are using them? This opens up a can of worms. Will Nvidia let us opt out? Or will it be an opt in? Will Nvidia tell us what software they are running on our computers? Will Nvidia be able to see my computer's screen? Will I be able to see Nvidia's software running using my computer's "task manager"? Will the computations be sent across international borders? Will Nvidia be paying us for the use of our computers? Will Nvidia be tracking any personal data like unique computer IDs? Will Nvidia be giving access to my computer to law enforcement with a warrant?

    I don't think I want Nvidia or anyone else knowing what's in my house or what internet-of-things devices are in my house, let alone controlling what my processors are running. This is exactly the kind of thinking by companies like Google/Facebook that has made Apple a two trillion dollar company because some people actually value Apple's attitudes toward privacy and security.

    edited September 2020 aderutterwatto_cobra
  • Reply 16 of 57
    Rayz2016Rayz2016 Posts: 6,957member
    tmay said:
    techconc said:
    flydog said:
    Nonsense.  Apple doesn’t rely on ARM for design or manufacturing. It has a perpetual license that allow it to design its own chips.
    You either didn’t read or didn’t understand my post as your comment doesn’t address what I actually said.  

    By definition, a perpetual license for the ISA would cover all future versions, and while ARM may very well have a maintenance fee structure in place with Apple to maintain that license in perpetuity, it is more likely that Apple negotiated and paid a lump sum for that perpetual license.

    Apple has deviated from the ISA at least since the A7 SOC, and again by definition, Apple would have created a superset of the ISA, which would be proprietary to Apple. I can't imagine that this would have any noticeable impact on the virtualization of Linux. though it might require some small effort.

    It is conceivable that in the future, Nvidia might attempt to increase licensing fees "unreasonably", or deprecate all external licensing, leading to a hellscape of legal jeopardy, which would ultimately lead, I suspect, to an external caretaker that would take over management of the ARM operation. That seems unlikely to happen.

    Again, by definition, Apple would have guarantees and penalties written into any contracts that they would have enjoined with ARM. That's what Apple's legal department is for.


    Good grief.

    I was just going to type everything you just said. You've pretty much nailed it.

    The important point is that any attempt to extract further fees from the perpetual licensees would wreak havoc throughout the industry and would land Nvidia in multiple courts facing multiple lawsuits. 

    The only thing that Apple gets from ARM is the spec for the instruction set and a set of compatibility tests to make sure that their instruction set will still run basic ARM instructions. To break this, Nvidia would have to break the instruction set for everyone, which would have very little effect on Apple, since the only thing they need compatibility for is virtualisation and containers, but would cause an industry meltdown.

    If the ARM sale represented a problem, then Apple would have bought it when they were offered first refusal. They could've let it carry on as an independent entity (much as they do with Filemaker), raking in license fees. The fact that they chose not to demonstrates how far ASi is dependence on ARM.
    MacProwatto_cobrarundhvid
  • Reply 17 of 57
    mcdavemcdave Posts: 1,754member
    I suspect this move is more troubling for Intel than Apple.  The ARM/NVIDIA ISA combo currently holds pole position in supercomputing and I can’t help but think semi-custom console & ARM Windows PC SoCs are on the agenda too.
    bloodlineelijahgwatto_cobra
  • Reply 18 of 57
    The danger to the world's tech industry comes not only from NVIDIA but from Trump and the U.S.    From the BBC:

    "But two of ARM's co-founders have raised other issues about the takeover.

    Hermann Hauser and Tudor Brown had suggested ARM should remain "neutral", rather than be owned by a company like Nvidia, which produces its own processors.
    The concern is that there would be a conflict of interest since ARM's clients would become dependent on a business with which many also compete for sales.

    Moreover, the two co-founders also claimed that once ARM was owned by an American firm, Washington could try to block Chinese companies from using its knowhow as part of a wider trade clash between the countries.

    "If ARM becomes a US subsidiary of a US company, it falls under the Cfius [Committee on Foreign Investment in the United States] regulations," Mr Hauser told BBC Radio 4's Today programme.

    "[That] means that if hundreds of UK companies that incorporate ARM's [technology] in their products, want to sell it, and export it to anywhere in the world including China - which is a major market - the decision on whether they will be allowed to export it will be made in the White House and not in Downing Street."


    Quite obviously the U.S. has become an unreliable partner -- violating agreements at will and trying to dictate who can do business with who.
    In this case, the potential ramifications for U.S. bullying have escalated considerably.   So, the BBC further reports:

    "But experts say one risk Nvidia faces is that the takeover could encourage ARM's wider client list to shift focus to a rival type of chip technology, which lags behind in terms of adoption but has the benefit of not being controlled by one company.

    "ARM is facing growing competition from RISC-V, an open-source architecture," wrote CCS Insight's Geoff Blaber in a recent research note.

    "If its partners believed that ARM's integrity and independence was compromised, it would accelerate the growth of RISC-V and in the process devalue ARM."
    Mr Blaber also suggested regulators might block the deal.

    "This process will take months if not years with a high chance of failure," he told the BBC."

    And, that last is an important note:   Why would Britain hand over control of one of its premier organizations to Donald Trump?  Or, why would China approve it?   Trump has essentially declared war on them and this would just add more bullets to his arsenal.

    You can bet that both companies and countries will be actively looking for and promoting alternatives to ARM if this shows any signs of actually going through because this sale poses an existential threat to them.



    Pascalxxavon b7
  • Reply 19 of 57
    Reuters reports that ARM's customers are likely to object to this sale.   But that NVIDIA's CEO states (effectively) 'Don't worry!  Be Happy!":

    "Nvidia Chief Executive Jensen Huang and Arm Chief Executive Simon Segars told Reuters in an interview that Nvidia will retain Arm’s United Kingdom headquarters - which exempt it from many U.S. export control laws - and open licensing model."

    That's nonsense!
    Trump has repeatedly demonstrated that HE controls any technology owned by an American company regardless of where it is used -- and, in this case, that will mean ARM.

    So, that along with the likelihood that NVIDIA would leverage its ARM holding to its advantage over others prompted this:
    "A source at one U.S. company using Arm designs said the move would likely accelerate an industry shift already under way from Arm designs to RISC-V. “This will only intensify that,”

  • Reply 20 of 57
    And, more from Reuters:

    "Co-founder of Arm attacks sale to Nvidia as a 'disaster'

    By Reuters Staff

    2 Min Read

    LONDON (Reuters) - The $40 billion sale of British chip designer Arm to Nvidia Corp NVDA.O from Japan's SoftBank 9984.T is a disaster that will destroy its business model, Arm's co-founder said on Monday.

    “It’s a disaster for Cambridge, the UK and Europe,” Hermann Hauser told Reuters in an interview. “It’s the last European technology company with global relevance and it’s being sold to the Americans.”

    The deal announced overnight would destroy Arm’s business model as “the Switzerland of the semiconductor industry”, Hauser said. Nvidia competes with Arm’s clients.

    Hauser called on the UK government to put three conditions on the deal: a guarantee of jobs in Britain; a promise to preserve ARM’s open business model; and an exception to U.S. security reviews on its client relationships.

    If these could not be met, “the British government should help orchestrate an initial public offering of ARM on the London Stock Exchange and make it a British company”, Hauser said, urging the UK to back a market float as a cornerstone investor."


    It sounds like he thinks selling ARM to ANY American company is a very bad idea for ARM and for the world.
    Thanks Trump!   I thought you were going to make us great again?   Instead you've made us a pariah.
    muthuk_vanalingam
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