Talks between NVIDIA and SoftBank over the sale of Arm Holdings may have advanced, but this is still a very bad idea

By Jerry Hildenbrand
published

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NVIDIA Jetson TX2 (Image credit: Jerry Hildenbrand / Android Central)
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Update, July 31 (9:50 am ET): Bloomberg reports that talks between NVIDIA and SoftBank have progressed and a deal could be reached in the next few weeks.

I'm an NVIDIA fan. The company is best known for making uber-powerful GPUs that almost single-handedly drive the gaming industry, but it also makes things like machine learning servers, self-driving cars, robots, and the best Android TV box ever made. I think all of their products are great and even enjoyed using NVIDIA-powered phones before Qualcomm drove the company out of the industry.

I'm Team NVIDIA for most things. Not this thing, though.

Call me a fanboy, call me whatever, but I like the company and the things it makes. But I hate the idea of NVIDIA controlling Arm, the company that makes the reference design that every phone chipmaker uses to build processors.

This is all just a rumor, and like a lot of rumors might not even be remotely true. But we do know that SoftBank — the Japanese firm that has control over Arm Holdings — isn't afraid to buy and sell other companies. Hearing a SoftBank executive publicly say that the company was considering selling Arm Holdings would not surprise me one bit.

It's also not surprising that NVIDIA would be interested in acquiring Arm. When you think of NVIDIA, you probably think about graphics cards. The company also makes a really good ARM CPU-based chip that combines a fast processor with GPU cores for computing and it's one of the most powerful ARM-based chips you can buy today. Forget powering a phone or tablet, something like a Jetson Xavier NX (opens in new tab) can run a server or power a self-driving car.

The problem is that Arm Holdings (the company) licenses ARM (all caps and the name of the design Arm makes) CPU design to, well, everybody. ARM cores are at the base of every chip in every mobile device made today as well as millions of servers, scientific devices, hobby boards like the Raspberry Pi, and Internet of Things devices like a Nest Mini or the Nest Wifi.

NVIDIA would still license ARM designs to everybody, but those designs would slowly change.

NVIDIA could still license the design if it were in charge and would because it's lucrative. Forcing whoever buys Arm to continue the licensing program will surely be one of the stipulations of sale regulators in the U.S. and U.K. — Arm is based in Cambridge — place on any acquisition. I'm not worried that NVIDIA would cut off Qualcomm or Apple or Samsung from making CPUs based on ARM designs.

I'm worried about the designs themselves. NVIDIA — or any other company that makes ARM chips today — would want future designs to benefit its current development. I think NVIDIA makes a heck of a chip, so that's not necessarily a bad thing, but Apple and Qualcomm also make a heck of a chip and those companies wouldn't be very happy with changes that force them to work around issues.

Geforce Rtx Card

Source: Jerry Hildenbrand / Android Central (Image credit: Source: Jerry Hildenbrand / Android Central)

This would definitely happen if any company building ARM-based chips were to buy Arm Holdings, not just NVIDIA. That's why we should be against it and regulators need to not allow it. If ARM designs were to slowly favor NVIDIA's chip development preference, any innovation that may have come from Qualcomm or Samsung would be stifled. This is how you stagnate an industry that already is highly dependent on one product: ARM CPUs.

A neutral company that doesn't build chips needs to buy Arm and pump it full of cash.

As much as I would love to see NVIDIA able to design and build a full chip package from the ground up, and as great as I think that chip might be, I just don't want to see it happen. It'd be bad for technology as a whole, which is more important. NVIDIA should keep building amazing graphics adapters and legendary Android TV devices but not start designing the reference that every technology company in the world depends on.

Update, July 31 (9:50 am ET) — Bloomberg reports talks between NVIDIA and SoftBank have advanced.

According to an unnamed source via Bloomberg, talks between NVIDIA and SoftBank have been ongoing and the two companies are close to working out a deal. It's also noted that, according to this source, NVIDIA is the only company currently interested in buying ARM.

Representatives from NVIDIA, SoftBank, and Arm Holdings declined to comment when contacted by Bloomberg.

Jerry Hildenbrand
Jerry Hildenbrand
Senior Editor — Google Ecosystem

Jerry is an amateur woodworker and struggling shade tree mechanic. There's nothing he can't take apart, but many things he can't reassemble. You'll find him writing and speaking his loud opinion on Android Central and occasionally on Twitter.

14 Comments
  • The sky won't fall if Nvidia buys it. If the ARM designs start to disadvantage Apple/Samsung/whoever, then they will develop ARM alternatives which is really what they should be doing anyways. The fundamental reason you see this as a problem in the first place is the lack of competition in the CPU design space.
  • I think you may be grossly underestimating how difficult it is to design a completely new CPU architecture from scratch. Samsung has trouble building a competitive product even with the ARM architecture to work from.
  • I know it's a Herculean task, but if Nvidia's influence actually started to significantly hurt the bottom line of all those multi-billion dollar corporations, trust me: enough R&D resources would go to creating an alternative architecture. The industry just hasn't felt any pressure to create a new one yet.
  • If Arm was to go up for sale, who do you think should buy it?
  • The best thing would be for all the major ARM licensees to create a public shell company to acquire ARM. Obviously Apple and Samsung would have the largest numbers of shares, but neither would dominate. ARM would then function as a public limited company and could go to the market to raise additional funds.
  • NVIDIA buying ARM would be a bad idea, but Google or Apple or Samsung buying them would be even worse. Google would screw it up, and Apple or Samsung would block features to competitors. The best option is what you already wrote: "A neutral company that doesn't build chips needs to buy Arm and pump it full of cash".
  • Something else to think about is that a neutral company could very well jack up the licence fees which would cause its own problems.
  • I think the author has made the point that NVIDIA should actually by Arm Holdings. It sounds to me like there is a monopoly situation going on right now and if this ultimately forces competition, that's a good thing for both the industry and consumers.
  • It doesn't work like that when you're talking about ARM though. NVIDIA owning ARM would change nothing as far as marketshare and players in the ARM-based chip space.
  • I do not think the EU would approve the deal on monopoly grounds. Especially as it would put the ownership of both the major CPU architectures in US hands, and neither the EU nor China would be very happy about that.
  • Here's what should happen: A company like Apple buys ARM, but instead of bringing it in house it is spun into its own autonomous entity where the operation of the ARM holdings essentially does not change. They may be owned by that company but nothing changes with how things are, and there is a stipulation in the sale that nothing changes. Ditto for the managing of IP. There are not many companies that would be willing to invest like that with that being the end result, but Apple would be one. Nvidia could be one, but they are not as cash-rich as Apple is and may eventually want a return on the investment they won't get with this set up. That type of sale is the only way a sale of ARM works.
  • I don't think this would be negative. Currently, Qualcomm has a sort of monopoly over ARM chips for smartphones outside of Apple's chips, and they have been steadily increasing in price because competitors can't compete with their bundled telecom licenses. If Nvidia can control the chip license while Qualcomm can control the telecom licenses, I think we'd start to see real competition. Also, Nvidia could break into the desktop CPU space with ARM designs to challenge AMD & Intel. And maybe companies reliant on ARM could change to Risc V or something, diversify the market
  • I'd rather Apple buy ARM instead.
  • I can't imagine why any company other than a chip designer or manufacturer would want to buy Arm Holdings. Surely Softbank wants a PREMIUM for Arm Holdings. If Softbank thought they could get the price they want for Arm spinning it off into a separate company via an IPO for instance, they would probably have gone that route. I really don't think it would rise any anti-trust concerns if NVIDIA were to buy it. Now if Qualcomm, Intel, Apple, or Samsung wanted to buy it that may raise anti-trust concerns....