Arm’s co-founder thinks that Arm won’t be neutral under Nvidia. Nvidia chief executive Jensen Huang disagrees.
Today’s Best Tech Deals
Picked by PCWorld’s Editors
Top Deals On Great Products
Picked by Techconnect’s Editors
Most industry watchers think that antitrust agencies will ask some hard questions of Nvidiaâ€™s $40 billion acquisition of Arm, the largest chip deal ever and one that would put control of the entire mobile CPU industry in Nvidiaâ€™s hands.That Arm holds a virtual monopoly in the smartphone industry is unquestionedâ€”practically every smartphone made includes some derivative of an Arm chip design. Arm designs the fundamental CPU architecture and associated logic, then licenses it to companies like Qualcomm and Apple. Those licensees can modify the design according to the terms of the contract, then manufacture them.Owning the underpinnings of every smartphone on the market would give Nvidia enormous power, theoretically allowing it to play favorites. It would also give Nvidia the ability to shape Arm development in the server industry, potentially striking favorable deals for companies building Arm servers with Nvidia GPUs.Jensen Huang, Nvidiaâ€™s chief executive, doesnâ€™t see it that way. In a conference call with analysts on Sunday, Huang offered a lengthy argument that owning Armâ€™s intellectual property will complement Nvidiaâ€™s existing businesses, and help Arm accelerate its own technology roadmap. He pointed to the companyâ€™s acquisition of networking powerhouse Mellanox, a mere $7 billion transaction that was signed in March and completed this past April.Â Â A surprise argument for an antitrust investigationThe argument for a strong antitrust investigation has been essentially made by… Armâ€™s co-founder. Hermann HauserÂ told the BBC that Softbank, the Japanese conglomerate that plans to sell Arm to Nvidia in a potential $40 billion deal, was essentially neutral in terms of licensing Armâ€™s technology to companies like Apple, Qualcomm, and Samsung. Because Softbank is a massive conglomerate spanning multiple industries, Armâ€™s licensing practices were essentially neutral.Under Nvidia, the company will be licensing Arm technology to Nvidiaâ€™s rivalsâ€”implicitly threatening Armâ€™s neutrality, and raising doubts that those companies will be treated equally, Hauser said. â€śIf it becomes part of Nvidia, most of the licensees are competitors of Nvidia, and will of course then look for an alternative to Arm,â€ť Hauser said.The argument then, of course, will be: what alternative? In the server market, that would mean Intel, AMD, Arm, and a small coterie of Chinese processor suppliers.Â RISC-V is growing as a royalty-free alternative to Arm, but remains relatively small at this point. In the smartphone market, thereâ€™s little choice besides Arm.Â Huang: Nvidia and Arm are â€ścomplementaryâ€ťHuang, of course, thinks differently. In a Sunday evening call with analysts, Huang sad that he believes that regulatory agencies are â€ślogical,â€ť and â€śare about protecting competition in the markets.â€ťâ€śYou know that we have a fair amount of experience here recently with Mellanox,â€ť Huang said. â€ś And the thing that I can tell you about the regulatory discussionsâ€”itâ€™s logical, and itâ€™s about protecting competition in the markets.â€śJust as with the case of Mellanox, Nvidia and ARM are completely complementary,â€ť Huang continued. â€śNvidia doesnâ€™t design CPUs; we have no CPU instruction set.Â Nvidia doesnâ€™t license IP to semiconductor companies and in that very way weâ€™re not competitors. And we have every intention to add more IP to it. And, and also unlike Arm, Nvidia does not participate in the cell phone market. And so the two companies are very complementary.â€śThe customers will see the benefit as well, and the regulatory agencies will see it as well: Our intention is to combine the engineering and the technical, the R&D capacity of both companies, so that we can accelerate the development of technology for Armâ€™s vast ecosystem,â€ť Huang concluded.Simon Segars, the current chief executive of Arm, agreed. â€śAnyone who wants to build a chipâ€”we are in the business of providing technology to them,â€ť he said. â€śThatâ€™s been the value ofÂ Arm and it would obviously be hugely value-destructive to to do something else.â€ťHuang said that the Nvidia-Arm partnership would be used to accelerate the development of server CPUs like the Amazon Gravitron, a custom 64-bit Arm CPU that Amazon uses in its own EC2 data centers, or Nvidiaâ€™s own Jetson CPUs for edge computing. And Fujitsuâ€™s Fugaka supercomputer, built with Arm chips, is the worldâ€™s most powerful, Huang added.Â Will competitors agree with Huangâ€™s assessment? Will the Department of Justice or the European Union? If history holds, the deal wonâ€™t close for at least a yearâ€™s time, and Huang said he expects it to take that long or longer. That will be plenty of time for Nvidiaâ€™s potential licensees to weigh inâ€”or challenge the deal in court.Â
Note: When you purchase something after clicking links in our articles, we may earn a small commission. Read our affiliate link policy for more details.
As PCWorld’s senior editor, Mark focuses on Microsoft news and chip technology, among other beats.