Nvidia acquisition of ARM now likely to fail
03-02-2022 | By Robin Mitchell
Ever since Nvidia announced its plan to acquire ARM, engineers, companies, and governments alike have shown strong opposition to the deal. Why has there been so much backlash to Nvidia trying to acquire ARM, what is Nvidia currently facing, and how will this failure affect the industry?
Why has there been so much backlash to the Nvidia / ARM acquisition?
Companies buying other companies happens on almost a daily basis, and it is often encouraged as it allows businesses to expand, provide better products and services, and aid in the development of new technologies. This happens even more than most would think in the semiconductor industry, and many semiconductor companies consist of dozens of divisions.
For example, Intel has repeatedly acquired and sold off companies, including Mobileye, VOKE, Soft Machines, and Nervana. Xilinx is another example, having acquired RocketChip, Falcon Computing, Solarflare, and Triscend. These smaller companies do not disappear and instead become a part of the bigger name as a division with their own specialities.
However, when Nvidia announced that it would be acquiring ARM for $40bn, the whole world reacted viciously. Hundreds of articles were written outlining why such a move would be dangerous, governments launched investigations, and even comments from one of the founders of ARM, Herman Hauser, stating that ARM should remain independent.
But why has the world reacted so harshly to Nvidia? Isn’t this acquisition just like any other in the semiconductor industry? Short answer, no. The acquisition of ARM by Nvidia is akin to Intel deciding to purchase AMD or Qualcomm purchasing MediaTek, destroying the competition.
Nvidia themselves do not produce CPUs, so one would think that their acquisition of ARM could never lead to anti-competitive behaviour. However, Nvidia produces graphics chips, which work extremely closely to CPUs to the point that they can be considered a co-processor. When it comes to CPU architecture, standard off-the-shelf CPUs will rarely have instruction sets specifically aimed at a family of external graphics processors. This means that CPUs can be paired with GPUs from multiple manufacturers.
Thus, Nvidia having control over ARM products would allow Nvidia the opportunity to make adjustments in the ARM architecture so that it operates most efficiently with its own products, thereby penalising competitor GPUs. Furthermore, many competitors of Nvidia use ARM products, which would also give Nvidia the opportunity to prevent these competitors access to the latest ARM technology.
Finally, ARM is well known for its non-bias licensing. While its processors may be proprietary and therefore require licenses and royalties, ARM does not discriminate against customers and allows anyone to purchase its designs. The acquisition of ARM by Nvidia potentially threatens this neutrality, which is entirely unacceptable for the engineering world.
What is Nvidia currently facing?
Despite the constant waves of resistance from all areas of engineering and government, Nvidia continues to try and move the deal through. However, Nvidia faces multiple challenges in multiple countries since ARM is a multinational organisation and not a company that operates in a single country. All it takes for the deal to fall through is for any of the countries involved (US, UK, China etc.) to reject the deal on anti-competitive grounds.
Currently, this has not happened, and there is still a chance that the deal will go through. However, recent reports have stated that Nvidia may consider scrapping the acquisition due to the massive backlash faced and a large amount of resistance from governments. Furthermore, the deal placed by Nvidia has an expiry date (two years from the day of announcement in 2020), and this date is rapidly closing.
If the deal does not go through, the current majority owner of ARM, SoftBank, plans to float the company instead of outright selling it. This would help ARM raise money while giving SoftBank a path to move away from its ownership of ARM.
How will this affect the industry?
Nvidia’s failure to acquire ARM is not a reflection of Nvidia in the slightest; trying to purchase a company that is so heavily integrated into all aspects of modern life is a challenge in its own right. This failure shows how vital ARM is on a global scale and how many governments want to protect their ability to access ARM devices.
Furthermore, the acquisition failure would also demonstrate that the industry can protect key interests and fight against potential competition. Deals fall through all the time on such grounds, and companies very often face consumer protection laws. However, what can be said is that engineers can continue their work knowing that ARM will remain an independent CPU designer.