Nvidia’s $40 billion agreement to acquire Arm Ltd from SoftBank Group is likely to meet strong resistance from Nvidia’s chip industry rivals, analysts say, with murmurs of protests emerging in South Korea and China in hours of the deal’s announcement.
Arm has unparalleled advantage for a supplier of layouts and intellectual property to the majority of the international semiconductor industry, licensing its technology to clients like Intel Corp, Qualcomm and Samsung Electronics who increasingly contend with Nvidia.
Arm’s open method of licensing its own designs to all comers has turned the 160 billion processors sold based on its technology into a huge ecosystem of devices from smart phones to smart toasters.
Nvidia’s bargain would put Arm under the control of a US-based combatant amid a struggle between the United States and China, which is rushing to develop a national semiconductor industry while US officials seek to stem its rise.
Geoff Blaber, VP of research for the Americas using CCS Insights, said the deal “will rightly face huge opposition” from Arm’s customers.
“An acquisition by Nvidia would be detrimental to Arm and its ecosystem,” Blaber said.
“Independence is critical to the ongoing success of Arm and once that is compromised, its value will start to erode”.
Nvidia CEO Jensen Huang and Arm CEO Simon Segars told journalists at our partner news agency Reuters that Nvidia will keep Arm’s UK headquarters which exempt it from many US export control laws – and open licensing model.
Huang also said that Nvidia will expand the design by licensing some of Nvidia’s layouts – including its own graphic processing unit, or GPU, technology – via Arm’s community of technology spouses. That move would in theory allow those companies to compete with Nvidia.
Nvidia “took great pains to emphasise that Arm will continue to act as a neutral supplier, and it must not interfere with any of Arm’s licensing efforts, even if some Arm customers compete with Nvidia,” said Linley Gwennap, principal analyst at The Linley Group.
But the deal instantly provoked scepticism at the hours after it had been announced.
“China is going to hate it,” said one Chinese chip executive, noting that American companies working with Arm to make server chips will probably have a more difficult time selling in China if Arm had an American parent company.
South Korean chip business officials and specialists said that Nvidia’s Arm purchase would intensify Nvidia’s rivalry with Samsung, Qualcomm and many others in self-driving cars and other potential technologies, while raising concerns that Arm could increase licensing fees for competitions.
“Arm customers may try to find alternatives to Arm for the longer term,” a chip industry source in Korea explained.
Park Jea-gun, head of the Korean Society of Semiconductor & Display Technology, said the move marks an attempt by Nvidia to make an even deeper foray into the automotive chip market, where self-driving cars are set to remove and at which Samsung and Qualcomm are making big pushes.
“A formidable competitor will emerge in the automotive processor chip market,” Park said.
A source at one US company using Arm designs said the move would likely accelerate an industry shift already under way from Arm designs to RISC-V. “This is only going to intensify that,” that the person familiar with the issue said.
The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Stephen Nellis in San Francisco, Josh Horwitz in Shanghai and Hyunjoo Jin in Seoul. Editing by Greg Mitchell and Richard Pullin.
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