After much posturing, gnashing of teeth and the seeking of political cover, the graphics chip juggernaut Nvidia will acquire the hottest of technology properties, chip IP vendor Arm Ltd. Then, the necessary and painful shakeup of the global semiconductor industry will continue apace.
It was inevitable. Intel, built on the foundation of Gordon Moore’s seemingly inexorable law, is in its twilight. Nvidia’s leather-clad boss, Jensen Huang, snared Mellanox right out from Intel’s nose.
The die was cast.
“Big deals require big commitments,” asserts the analyst and Nvidia enthusiast Jon Peddie. “Nvidia demonstrated that with its Mellanox acquisition and it has done it again with the acquisition of Arm.”
The antitrust issues raised by Nvidia’s gambit are clear. A merger would give the GPU leader first crack at Arm’s low-power chip IP, strengthening its AI portfolio encumbered by high-performance but power-hogging graphics processors. The $40 billion deal for Arm—and astounding figure when one stops to consider — gives Nvidia a potentially unassailable position in AI workloads while threatening Intel’s stranglehold on the enterprise datacenter.
Along with Intel, wireless chip maker Qualcomm is also in Nvidia crosshairs. “Nvidia never could get their power budget down and finally gave up trying,” Peddie notes. “Arm could never get their performance up and finally settled for almost good enough.
“Now the magic of those two teams come together and in two, max three, years [and] you’re going to see GPUs that will rival, if not exceed Qualcomm on performance [and] power.”
Other industry watchers are necessarily more cautious. “Nvidia’s move to own Arm and its near total grip on licensed central processor unit technology in smartphones, tablets and other portable systems has stirred debate and fears about access to new design cores and instruction sets used by dozens of mobile MPU suppliers,” notes IC Insights in a research bulletin.
“To quell concerns, Nvidia immediately promised to maintain Arm’s ability to work independently with other IC companies — even its biggest competitors, such as Qualcomm, Samsung, MediaTek and others.
Window dressing, most likely, since Nvidia undoubtedly understands its power in the marketplace. The skeptics will have their day over the next 18 months or so as the Arm acquisition wends its way to completion, a deal that will cement Nvidia’s place at the top of the chip technology pyramid.
“There will be the naysayers who will whine that the deal is anti-competitive,” analyst Peddie acknowledges. “But why is it any more anti-competitive for Nvidia to have Arm and GPUs than it was for Arm to have CPUs and GPUs or AMD and Intel and Via to have x86 and GPUs?”
Good question.
Nvidia will have big task to prove that $40B investment is worthwhile, or bring the company down to its knee. As semi-linewidth continue to go down to 3nm or lower, the value of ARM is diminish rapidly. ARM has a revenue less than $2B and profit less than $350M, it will take Nvidia more than 130 year to earn the $40B to pay for ARM. Good luck Nvidia.