Nvidia close to giving up on $40B Arm acquisition

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Graphics chipmaker Nvidia may be close to giving up on an acquisition of Arm, with slow progress and industry backlash making it tough for the $40 billion deal to complete.




In September 2020, Nvidia initially announced it would be buying Arm from SoftBank for $40 billion in a cash and stock-based purchase. Over a year later, and that deal may be heading off the table.

Various obstacles that have surfaced since the deal became public knowledge has reportedly led to a change in stance at both companies over the acquisition. According to an anonymous source of Bloomberg, Nvidia doesn't believe the transaction will actually close.

On the other side of the fence, another source apparently claims SoftBank is working towards holding an initial public offering for Arm, if the Nvidia acquisition falls through.

Since the announcement of the deal, Nvidia, Arm, and Softbank have faced increased scrutiny from multiple quarters.

In the United States, the Federal Trade Commission sued to block the deal in December 2021, over concerns it would stifle innovation and harm competition in the chip market. The deal would "give one of the largest chip companies control over the computing technology and designs that rival firms rely on to depend their own competing chips."

Similarly, the UK government told the country's Competition and Markets Authority to investigate the takeover of Arm in April, citing national security concerns. A formal investigation into the deal commenced in November.

A source added that the deal could also have problems with authorities in China, who are apparently intending to block the takeover if it gains approval in other countries.

Chip producer Qualcomm opposed the deal in February 2021, concerned by the chance that Nvidia could end up becoming a gatekeeper for ARM's technology. As Arm licenses its chip designs to more than 500 companies, including Apple, there's seemingly a possibility Nvidia could prevent rivals and licensees from using those designs in the future.

Despite the opposition, the leadership of both Arm and Nvidia are still apparently working to make the deal happen, and publicly say they are committed to it.

An Nvidia spokesperson said the "transaction provides an opportunity to accelerate Arm and boost competition and innovation." Meanwhile SoftBank says "We remain hopeful that the transaction will be approved."

Further down the corporate ladder, there's a difference in opinion. In Nvidia, some believe the deal will fall through, while others hope an FTC trial could prove the purchase has merit.

At SoftBank, some factions want the deal to reach its eventual conclusion in part because of Nvidia's shares nearly doubling since the announcement. Others are preparing for an IPO, and would prefer that event to happen sooner rather than later.

There is a time limit for the deal to pass, with an initial agreement set to expire on September 13, marking two years since its announcement. This could be extended depending on regulatory approval delays.

Read on AppleInsider

Comments

  • Reply 1 of 7
    blastdoorblastdoor Posts: 2,683member
    Always seemed an odd purchase for SoftBank. I guess now they can just do an IPO and return to the old status quo.
    seanj
  • Reply 2 of 7
    GeorgeBMacGeorgeBMac Posts: 11,421member
    It seems the only ones supporting this were those who would benefit financially -- and even some them opposed it.
  • Reply 3 of 7
    wood1208wood1208 Posts: 2,742member
    It was very good acquisition for Nvidia to push ARM in data centers(low power consumption with higher performance) but UK not giving up it's crown jewel, few good companies UK have left
    elijahg
  • Reply 4 of 7
    wood1208 said:
    It was very good acquisition for Nvidia to push ARM in data centers(low power consumption with higher performance) but UK not giving up it's crown jewel, few good companies UK have left
    While I believe apple has a perpetual license for the ARM instruction set, my main concern with Nvidia purchasing arm is that they could start blocking out those current customers who don't.  I think the value of ARM as solely a instruction set/chip designer is that is has allowed so many companies to flourish.  While Nvidia being able to integrate some of their graphics and deep learning technology could push ARM forward, I don't think its worth the risk of either fracturing or blocking out other ARM licensees and the market that has created.   If you compare the list of people licensing/making ARM chips vs the x86 universe, its so much more diverse.  I can't see the Nvidia acquisition maintaining that level of openness and accessibility.  
    GeorgeBMac12Strangersseanjwatto_cobra
  • Reply 5 of 7
    wood1208 said:
    It was very good acquisition for Nvidia to push ARM in data centers(low power consumption with higher performance) but UK not giving up it's crown jewel, few good companies UK have left
    Huh? There is plenty of ARM in data centers. ARM servers have been around for ages, so long that all the major Linux distros have ARM and ARM64 versions. The problem: nobody buys them. They have 3% market share. First off, the "ARM has lower power consumption with higher performance" thing is mostly hype on the part of Apple Silicon fans. You guys keep forgetting 3 things.
    1. Not even Apple claims that the M1, M1 Pro and M1 Max has higher performance than Intel Core i9 and AMD Ryzen 9 chips. 
    https://www.pcworld.com/article/563017/even-apple-said-this-msi-laptop-smokes-the-m1-macbook-pro-and-it-just-got-faster.html
    And for good reason:
    https://www.pcworld.com/article/605149/intel-12th-gen-core-i9-12900k-performance-preview.html
    https://www.pcworld.com/article/607526/core-i9-12900hk-review-intel-alder-lake-laptops-crush-the-competition.html
    Apple has - from day one - only claimed that their chips will have the best power-per-watt.

    2. And the main reason why Apple offers the best power-per-watt is always being on the latest process. Apple is on 5nm currently with 4nm chips coming later this year. AMD is on 7nm and HOPES to get to 5nm this year. Intel was stuck on 14nm for 6 years and is finally on 10nm. But even on 7nm, the AMD Aerith SOC used for the Steam Deck will draw an average of 7W (4W min, 15W max). If loaded with Windows 11 and given a USB-C dock, it would be a more powerful PC than most productivity workers have despite being no bigger, heavier or thicker than the original iPad Mini. 

    3. Another reason why Apple offers the best power-per-watt: the CPU, GPU and RAM are all in the same SOC and they have written macOS to take maximum advantage of it. Please realize that servers and even high performance workstations cannot use a similar architecture or OS. They require much more RAM and GPU power than is currently possible to fit on a single die. Apple's unified approach means that it will generally have advantages over systems that have the exact same configuration (i.e. CPU cores, system RAM, integrated GPU) but at the cost of flexibility. The x86 workstation and server systems will be able to add CPU, RAM and GPU power to base systems, and do so rather cheaply. Apple Silicon doesn't offer that flexibility. You can only pay a ton of money to add CPU, GPU and RAM, and even that can only be added to a certain point.

    Of course, ARM servers don't use this approach: they also have CPU, RAM and GPU separate. But similarly, they don't benefit from the advantages of having them all on a single die - RAM in particular is a huge power draw, which is why smartphone batteries needed to get a lot bigger once RAM increased from 2-3 GB to up to 18 GB for some Android gaming phones now - which narrows the gap between them and x86 even further.

    Both Amazon and Microsoft are increasing their use of ARM servers in AWS and Azure, but they are nowhere close to ditching their Intel Xeon or AMD Epyc servers yet. Google meanwhile is doubling down on x86 and just did a massive order of AMD Epyc CPUs, which is big because they heavily relied on Intel for quite awhile. 
    edited January 25 t-bonemuthuk_vanalingam
  • Reply 6 of 7
    GeorgeBMacGeorgeBMac Posts: 11,421member
    wood1208 said:
    It was very good acquisition for Nvidia to push ARM in data centers(low power consumption with higher performance) but UK not giving up it's crown jewel, few good companies UK have left
    While I believe apple has a perpetual license for the ARM instruction set, my main concern with Nvidia purchasing arm is that they could start blocking out those current customers who don't.  I think the value of ARM as solely a instruction set/chip designer is that is has allowed so many companies to flourish.  While Nvidia being able to integrate some of their graphics and deep learning technology could push ARM forward, I don't think its worth the risk of either fracturing or blocking out other ARM licensees and the market that has created.   If you compare the list of people licensing/making ARM chips vs the x86 universe, its so much more diverse.  I can't see the Nvidia acquisition maintaining that level of openness and accessibility.  

    You have a lot of company, powerful company, who believe the same.
  • Reply 7 of 7
    seanjseanj Posts: 293member
    Nvidia buying ARM would have been as toxic as the Oracle purchase of Java from Sun. People would start looking for alternatives simply because of the new owner.
    GeorgeBMac
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