Nvidia's efforts to further consolidate the industry by purchasing Arm are all but dead

NVIDIA Jetson TX2
NVIDIA Jetson TX2 (Image credit: Jerry Hildenbrand / Android Central)

Nvidia buying Arm would, in the short-term, at least, seem like a good move for consumers. For one, it'd be a new venue for Nvidia to design and license excellent machine learning properties and likely buffer the capabilities of the standard Mali GPU used in so many mobile devices. But it seems like that's not going to happen.

In September 2020 Nvidia formally announced that it would be spending $40 billion on Arm Holdings. The deal would also see Softbank — Arm's current majority owner — gain a 10-percent stake in Nvidia and the company would remain in Cambridge England for "the foreseeable future." Of course, the next step was to seek regulatory approval and this is where things turn south.

The E.U. has already voiced its displeasure over the purchase. In the U.S., the FTC is suing to block the merger completely. At this time, we haven't heard anything official from China, but unless Nvidia finds a legal way to funnel money and technology into the country like Apple has, the Chinese government is very unlikely to approve of the acquisition. I mean, even one of Arm's original founders is against the idea.

As an aside, if you're curious why a British company owned by a Japanese corporation potentially being purchased by a U.S. brand needs approval from the E.U. or China, well, technically, it doesn't. As long as Great Britain (which is now independent of the E.U.), Japan, and the U.S. approve the sale, it can go forward. But Nvidia/Arm and all of the company's partners would very much like to sell products in the E.U. and China, so the two governments are very much involved.

While I don't have any authority over who buys Arm, I don't like the idea either, and I've written about it several times. My reasons are different, though, as I'm not inclined to care about what's best for Qualcomm or Samsung, or any other company that makes the Arm chips that power the best Android phones. I care about the long-term effects further consolidation of the tech industry may have from the consumer viewpoint.

Saying this would drive innovation and development of competing technology may be true.

I've heard plenty of feedback from folks who disagree with my views on the matter, and I thank the folks who took the time to reach out. I agree with many of the counterpoints offered to me, such as the notion that this will spur development on other existing processor architectures or even drive a company like Apple or Google to fund the development of a new design. I'm also a perpetual cynic who is confident that companies will just play along because it's easier and more cost-effective even if Arm becomes as challenging to work with as Nvidia has always been.

I'm a fan of Nvidia. I think the company makes excellent GPUs and its current Arm chips are great at being everything except power-efficient. I have about a dozen products powered by Nvidia and have paid retail for them all. But I can't ignore what others have said about working with Nvidia. Qualcomm has laid out a list of reasons why Nvidia would be a terrible steward for ARM core designs. Apple famously kicked the company to the curb over its practices. Unfortunately, the kernel developer that powers your Android phone has a message that I'm not able to repeat in regards to working with Nvidia, so I'll let him say it. Warning: It's pretty salty.

There is no reason to think that Nvidia will have the same mindset regarding ARM designs. In fact, doing so would hamper profits because Arm is a unique company that makes money by not making any products themselves. Instead, the company generates revenue by license fees. In this own words via a filing with the U.S. Securities and Exchange Commission:

We rely on our semiconductor partners to manufacture and market microprocessors based on our architecture to receive royalties in the future. We also depend on them to add value to our licensed architecture by providing complete ARM-based microprocessor solutions to meet the specific application needs of systems companies.

In any case, my feelings — or Qualcomm's, or Apple's, or Linus Torvalds' — have no bearing, nor should they. The final word comes from global regulatory bodies, and Nvidia needs them all to agree. So far, things are looking very bleak on that front, and it's only going to get worse if China thinks the sale will go through.

As much as I want to see Nvidia refine and license its core ML designs, we might have dodged a bullet with this one.

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.

6 Comments
  • This is obviously complicated, and I get why people had problems with nvidia, but what’s the better option? All of the BIG tech companies would be even worse. If SoftBank is stuck with it they’ll probably just bleed the value out of it. What’s the solution here?
  • The better option would be for Arm to remain an independent company. These mergers are all steps towards monopolizing, and nobody has any benefit from this, aside shareholders.
  • The solution is definitely not to create another big corp that'll run the narrative with lies. That'll just end up costing us consumers even more while we're forced into being happy about getting even less.
    So, the solution is for ARM (Softbank) to do its duty towards its share holders and make the best they can do instead of trying to make a quick stock market buck.
  • Before SoftBank bought ARM, it was listed on the London Stock Exchange. Floating it again (listing it in London or New York and selling shares in it) was and is always an option, and one that's routinely mentioned:
    https://www.telegraph.co.uk/technology/2020/08/11/softbank-confirms-talk...
    https://www.telegraph.co.uk/technology/2021/07/24/brussels-delays-nvidia...
  • I think there must be purchases/mergers somewhere that were beneficial to all concerned, but offhand all I can think of were mixed blessings at best. The only one I saw up close and personal included criminal activity on the part of the buyers. There was actual theft of property and interstate transport of the stolen goods. They counted on the local leasing companies not pressing charges over a few thousand dollars of used computer equipment and office machines. They were apparently right.
  • The British authorities are giving the deal a very close inspection, too: https://www.theregister.com/2021/11/16/nvidia/