On Sunday, the American company NVIDIA announced that they would be acquiring the British chip maker Arm Limited from Softbank. The deal has been valued at around 40 billion dollars US. Sources close to ARM state that the company will continue to operate as normal and remain headquartered in the UK. The value of the deal exceeds what Softbank payed for ARM back in 2016 which was around 32 billion dollars. However, the importance of the chip-maker is worth far more than any revenue generated as the company licenses technology that is at the heart of more than a billion smartphones worldwide.
The deal does leave many other tech giants such as Apple and Samsung worried about how it will affect their own products. NVIDIA CEO Jenson Huang has stated that he intends to preserve the neutrality of licensing ARM products into the future and only wishes to “expand its client list.” Regulatory bodies may disagree as the deal has not been finalized just yet. The two companies do not seem to have any worries moving forward.
The question becomes, “What is the advantage of this deal?” Well, NVIDIA gets access to a new market with ARM processors. NVIDIA has generally focused on the high-end of the computer chip market but the new acquisition will position them in smartphones, cars, networking, and general Internet of Things. It also puts them on par with other chip-makers such as Intel in setting trends in chip technology. ARM will get access to NVIDIA’s massive research and development budget. This can only be good for the future of highly efficient and low cost processing which is important as major players like Microsoft and Apple both have expressed interest in offering products with ARM chips.
This all depends on the good-will of NVIDIA who has made a play for unparalleled power in the tech industry. Add in the issue of the US-China trade war and the outlook of the semi-conductor/chip industry becomes even more interesting. ARM China represents about 20 percent of total ARM revenue which is now potentially controlled by NVIDIA (an American company).
In the end, the deal is expected to take about 18 months to complete and there will be some corporate jockeying and deals that could change the tech industry as we know it.
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