After weeks of rumors, Nvidia announced last night that it was ready to plop down $40 billion to acquire Arm Limited, better known as that company that designs Arm architecture behind CPUs in practically every gadget you use on a day-to-day basis.
That tracks with reports from the past few months. In late July, Bloomberg noted that Nvidia was eyeing Arm, while also reporting that Apple—despite a well-publicized shift to Arm-based silicon—wasn’t interested. SoftBank, the Japanese telecom company that bought Arm for $31 billion in 2016, has been pummeled by the pandemic, and selling Arm is believed to be a bid to raise some moolah to offset that. As part of the deal, Nvidia is forking over $21.5 billion in stock, and $12 billion in cash, of which $2 billion will be handed over at signing.
That said, Arm’s ubiquity has meant its sale is tricky from an anti-trust front. SoftBank buying Arm in 2016 flew under the radar in large part because the company itself doesn’t make its own devices or sell chips. Nearly every other company that would’ve been interested in buying Arm would’ve raised huge regulatory red flags.
As Ars Technica points out, Arm itself doesn’t produce its own chips—it licenses its technology to other companies based on its Arm CPU architecture. Apple, Intel, Samsung, Qualcomm, and Huawei are all examples of companies that license from Arm. That means it’s a real no-no for Qualcomm, the chipmaker that’s already in the majority of Android smartphones, as it would practically mean total domination of the market. Likewise, Google wouldn’t be in the running as it’s already under intense anti-trust scrutiny—buying Arm would only make it worse when you factor in Google’s dominance due to the Android operating system. Apple might’ve made some sense on account of all the hullabaloo that is Apple Silicon, and SoftBank did hold preliminary talks with the Cupertino tech giant, but again, with so many of its rivals as Arm licensees, it would’ve been a hard sell.
Nvidia, however, is the least controversial processor company that could buy Arm. While it also licenses Arm technology, Nvidia’s main schtick is GPUs. There’s a reason you don’t really hear about Nvidia with regard to smartphones. In fact, the only real outside hardware using its mobile chipset Tegra is the Nintendo Switch and the Magic Leap headset, which let’s be real, doesn’t really count as a win. That said, should the deal go through, Nvidia buying Arm could mean a lot of major improvements to the Tegra chipset and could theoretically, be a good thing for Nintendo down the line.
This deal is huge and will have a huge ripple effect on the industry. Not only will Nvidia, practically overnight, gain a huge foothold in the smartphone market, it’ll also position it as a major player in the riveting world of... data centers. Nvidia CEO Jensen Huang has been quoted by both Bloomberg and the New York Times as stating a major priority will be expanding Arm chips for networking and cloud computing—an area that Intel has a 90% share in.
But the Nvidia-Arm deal is not necessarily a foregone conclusion—now is not exactly a boom time for big tech mergers. Appeasing regulators could be a big reason why in its announcement, Nvidia committed to keeping Arm based in the UK and explicitly stating it is committed to keeping Arm’s “open-licensing model while maintaining the global customer neutrality that has been foundational to its success.” We’ll have to see over the next 18 months whether regulators take Nvidia’s assurances at face value.