With its $40 billion deal to acquire chip designer Arm from SoftBank, Nvidia could make bold advances in smartphone technology and data centres.
Nvidia was founded on the premise that general purpose microprocessors could not meet the demands of graphics-based computing. It has since become known for designing the high-performance graphics processing units (GPUs) used in video games, as well as system on a chip units (SoCs) for mobile computing and automotive. The Silicon Valley-based company has also successfully expanded into artificial intelligence. This, along with a major surge in gaming during the pandemic, has pushed Nvidia’s market cap to more than $300 billion.
In artificial intelligence, Nvidia has placed particular focus on data centres, with AI applications that support the ongoing trend towards more distributed cloud storage. In April the company purchased Mellanox, an Israeli firm that specialises in high-speed networking chips used to connect servers in cloud data centres. This has positioned Nvidia to gain more control of networking technology and other key components in data centres.
Should it succeed in acquiring U.K.-based Arm, Nvidia would become a dominant player in both smartphone technology and data centres. Arm’s technology is at the heart of millions of mobile devices, and has been gaining ground in data centres as well. The firm was acquired by SoftBank in 2016. The Japanese conglomerate is now seeking to exit, as the $32 billion deal has not yielded the anticipated rewards. This is despite Arm’s success in making its way into many kinds of internet-connected devices, according to The New York Times.
Acquiring Arm could also enable Nvidia to advance into the kind of general-purpose computing technology long dominated by Intel. Huang said the deal marked “the first time in history the industry could see something that is genuinely alternative” to Intel in the semiconductor industry. He also said that the acquisition would create the “world’s premier computing company for the age of AI”, bringing the technology to distributed devices, and that Nvidia would begin licensing some of its own technology to other companies for the first time, using Arm’s services. First, it will need regulatory approval in the United States, Britain, the European Union and China.
The deal between Nvidia and SoftBank will draw close scrutiny from antitrust authorities, not the least because Arm’s customers include the likes of Apple, Samsung, Amazon, Qualcomm and Huawei. One issue is that while Arm is currently owned by SoftBank, it is generally seen as an independent entity that treats all licensees equally. Nvidia founder and CEO Jensen Huang has said that he would continue to operate Arm in the same manner, maintaining its “customer neutrality”, yet semiconductor industry executives and analysts see the potential for conflicts of interest.