Nvidia’s acquisition of ARM, China and the UK are not happy

After nearly three months of speculation, repeated reversals and denials, the rumors finally settled.

On September 14, Beijing time, Nvidia officially announced that it would acquire SoftBank’s ARM for US$40 billion. If the transaction is finally reached, the transaction will be the largest acquisition in the history of the semiconductor industry.

At the online media conference on Nvidia’s acquisition of ARM, Nvidia CEO Huang Renxun once again reiterated the significance of acquiring ARM. ARM covers a wider range of computer ecosystem equipment categories, which will further expand Nvidia’s ecosystem and increase financial profit margins for Nvidia. Earnings per share are also helpful.

It is understood that after the completion of the transaction, ARM will operate independently as a division of NVIDIA, and its headquarters will continue to be established in Cambridge, UK. At the same time, SoftBank will retain 10% of ARM’s shares. At online media conferences, the media’s focus is generally on how to ensure ARM’s neutrality and independence, and how it will affect ARM customers.

Nvidia CEO Huang Renxun assured that ” Nvidia has a strong desire to maintain ARM’s independent operation. After all, the independent business model is the only way for ARM to continue to expand its success. ” ARM CEO Simon Segals also said that ARM communicates with many customers. Clarify to everyone that ARM will maintain a neutral and independent business model.

Nevertheless, Nvidia’s acquisition of ARM has caused intense concerns in the industry. On the day of the transaction announcement, the voice of opposition first began to ferment from within ARM. ARM co-founder Hermann Hauser issued an open letter to the British government, “If the American company Nvidia acquires ARM, this transaction is a complete disaster for Cambridge, the UK and even Europe, destroying ARM’s neutrality and business model. A considerable part of it is in direct competition with Nvidia, which means that the acquisition agreement will create industry monopoly.”

In China on the other side of the ocean, since the news of Nvidia’s acquisition of ARM, it has already affected the sensitive nerves of the industry. In particular, the United States has blocked Huawei for three consecutive times, cutting off Huawei’s software, chip architecture licensing, and chip foundry paths. TikTok is facing a special node withdrawing from the US market. Nvidia’s acquisition of ARM is destined to not stay in the calm before the storm. .

Nvidia official website has been updated with the theme of “Acquisition ARM”|Nvidia official website

Has a profound impact on Chinese companies

The most direct impact of Nvidia’s acquisition of ARM will be that the United States will further consolidate its leading position in key semiconductors such as CPUs and GPUs, and control the industry’s right to speak.

Quite different from the ARM business model, NVIDIA sells GPU chips. In the early years, GPUs were mainly used in PC-side graphics processing. After the third wave of AI artificial intelligence in 2015, GPUs assumed the demand for processing a large amount of deep learning computing power. GPUs were widely used in data centers and diverted the functions of CPUs in the cloud. The core hardware of the AI ​​era.

ARM does not sell chips, and its business model is IP licensing. It licenses the core architecture of the chip to chip manufacturers, who will develop them in accordance with the terms of the contract. More than 90% of the CPU chip architecture of mobile phone manufacturers comes from ARM’s authorization, such as Apple, Qualcomm, Samsung, Huawei, MediaTek, etc. In addition, ARM also has some mobile GPUs and data center CPU businesses.

Once the acquisition is successful, the United States will have three trump cards of Nvidia (PC, data center GPU), Intel (PC, data center CPU), and ARM (mobile terminal CPU) , becoming the mobile terminal of CPU, GPU, and even PC and data center. Absolute hegemony, the global industrial chain is becoming more fragmented, and the technological gap is deepening.

In China, companies with chip design capabilities such as Huawei (mobile phones and data centers) and ZTE require direct IP authorization from ARM. Mobile phone manufacturers such as OPPO, vivo, Xiaomi, and OnePlus will use Qualcomm, MediaTek, and Samsung chips, which will be indirectly affected.

Domestic industry chain concerns are nothing more than two points. On the one hand, whether ARM can continue to maintain neutrality, after all, obtaining IP authorization from competitors is highly uncertain, which may cause ARM customers to secretly store their positions and turn to other ecological camps to seek alternatives. . The reason why ARM can attract a wide range of partners around the world is partly because ARM does not have any competitive relationship with partners.

On the other hand, if Nvidia completes the acquisition of ARM, whether ARM will be fully and directly controlled by the Committee on Foreign Investment in the United States (CFIUS) in the future.

ARM CEO Simon Segals said at an online media conference, “Most of ARM’s products come from outside the United States and are basically not subject to US export regulations. Having a US parent company will not bring any change.” The subtlety is , Nvidia CEO Huang Renxun did not comment.

People in the domestic industry are generally skeptical about this, thinking that ARM is very likely to become a new bargaining chip for the United States to counterbalance the development of China’s technology industry.

More importantly, starting from the interests of the domestic and global industrial chain, beware of giants building the moat of the next era, which will help balance the healthy development of the industry and create opportunities for other companies with potential to overtake.

For example, the acquisition of NXP by Qualcomm. It took nearly two years, and the purchase amount reached 44 billion U.S. dollars, which is higher than Nvidia’s acquisition of ARM. After successfully passing the anti-monopoly approvals in eight countries, it was finally terminated in China, and Qualcomm had to abandon the acquisition. Qualcomm has established high patent barriers in the 3G and 4G era, and after the arrival of the 5G era of Internet of Everything, if you want to continue to maintain its dominant position and connect different smart terminals, it must take advantage of NXP’s advantages in the IoT field.

Therefore, no matter from which point of view, Nvidia’s acquisition of ARM is not a simple business transaction, behind it is a game of different interest groups. Taking a step back, it may take time to verify what real and substantial leap the acquisition of ARM can bring to NVIDIA’s own business.

In the Internet of Things era, can ARM help NVIDIA “realize its dream”?

In 2016, SoftBank acquired ARM at a record price of $31.4 billion. It is the huge Internet of Things network behind ARM that SoftBank chairman and CEO Sun Zhengyi bet on. But whether it is financial returns, business growth, or the Internet of Things, ARM is far below Sun Zhengyi’s expectations.

In Huang Renxun’s view, the same is true, “AI is the most powerful technical force in the current era. It has already set off a new wave of computing. In the next few years, trillions of computers running AI will create a new Internet of Things. Thousands of times the Internet of People.”

In the opinion of some industry insiders, Nvidia’s acquisition of ARM, because the two business fields do not overlap much, it has more room for imagination. For example, “Forbes” imagined the possibility of Nvidia and ARM, including the network data center combination of CPU, GPU, and NPU, and smart phones and tablets based on GPU and NPU IP.

However, the “intersection” between Nvidia and ARM will first be reflected in the field of data centers and autonomous driving.

Nvidia officially mentioned that to establish a new global AI research center at ARM’s Cambridge headquarters, Nvidia will invest in the development of cutting-edge AI supercomputers equipped with ARM chips.

An industry analyst told Geek Park (ID: geekpark) that the essence of Nvidia’s acquisition of ARM was actually for the sake of drinking milk, and the reality of whether to buy the entire ranch. There is strategic significance for the business, but it is not necessary.

“ARM started with the RISC architecture and lacks advantages in the field of high-performance computing. Although Fujitsu of Japan won the title of supercomputer based on the ARM architecture, the declaration is more meaningful than practical. NVIDIA does not necessarily need the assistance of ARM in the field of high-performance computing. Compared with Intel X86 architecture, ARM still has a big gap.”

In any case, Nvidia’s acquisition of ARM will become a key event in the history of semiconductors and a “variable” in the development of China’s semiconductor industry and Nvidia’s own business. Unlike Nvidia’s acquisition of Mellanox, the acquisition of ARM may take longer, and Nvidia’s public opinion environment will also be more stringent. Before the final word is finalized, let the bullet fly for a while.

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