NVIDIA's acquisition of arm has been rumored for a long time, and now it has finally landed. On September 14, Softbank announced that it would sell all of its shares in arm to NVIDIA for up to $40 billion.
Arm, headquartered in Cambridge, UK, was founded in 1990. It is the world's largest semiconductor IP supplier and plays an important role in mobile ecology. At present, more than 90% of mobile chips in the world are based on ARM architecture. In addition, in the field of Internet of things chips, arm also plays a leading role. In 2016, arm accepted a $31 billion privatization offer from Softbank, delisted from Nasdaq and became a wholly-owned subsidiary of Softbank.
The position of arm also makes some people in the industry worry about whether the acquisition of a semiconductor IP supplier by NVIDIA, a chip design company, will affect the cooperation between the former and other chip design companies? In response, NVIDIA founder and CEO Huang Renxun repeatedly stressed in an online interview on the 14th that the integration would not change arm's core business model, that is, the open license business model and customer neutrality.
Executives of the two companies believe that for the arm ecosystem, the integration will enhance arm's R & D capabilities and expand its IP portfolio with NVIDIA's GPU and AI technologies. As for NVIDIA, this ambitious enterprise, which has just finished surpassing Intel in market value, has finally made up a key link of CPU. Huang Renxun said that artificial intelligence is the most powerful technology in today's era, and this integration will create the world's leading computing company in the AI era.
However, the deal remains to be approved by national regulators. In addition to the UK government's concerns about the loss of its most competitive technology companies and the jobs associated with them, NVIDIA needs to address the concerns of Chinese regulators. Especially in the context of trade friction between China and the United States, people are worried whether this will make the core technology that is crucial to the mobile industry be affected by US export controls.
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Softbank's deal with NVIDIA is worth up to $40 billion, of which $21.5 billion is NVIDIA's common stock. Sheng Linghai, vice president of Gartner research, told 21st century economic reporter that considering the share payment part, NVIDIA's high share price in recent years may provide some support for its acquisition of arm. Huang Renxun also said on the same day that Softbank agreed with NVIDIA to pay most of the amount in the form of shares, which means Softbank is optimistic about the transaction and the prospect of NVIDIA.
In the past few years, although NVIDIA's share price has been cut down due to the "avalanche" of digital currency, and has suffered heavy losses due to the collapse of US stocks caused by the new crown epidemic, it has not affected its continued to become the darling of Wall Street. After several falls, NVIDIA's share price can quickly rebound and continue to rise.
In July, NVIDIA's market value was close to $250 billion, surpassing Intel for the first time, which has been regarded as a benchmark for listed semiconductor companies. In August, NVIDIA's market value successfully exceeded $300 billion - no semiconductor company has been able to reach this level since the Internet bubble burst in late 2000.
Until the announcement of mellanox in 2019, NVIDIA had long been seen as not keen on acquisitions. Huang Renxun has previously explained that the reason why NVIDIA rarely takes mergers and acquisitions is that it prefers to create new markets through its own efforts. Prior to the acquisition of mellanox, NVIDIA's most ambitious acquisition was the acquisition of icera, a baseband and and RF manufacturer, for $367 million in 2011.
In recent years, NVIDIA, however, has gone out of the ordinary and began to invest heavily in the M & a market. In 2019, NVIDIA announced its acquisition of mellanox, an end-to-end network company in Israel, at a high price of $6.9 billion, which was completed in the first half of this year. Next, NVIDIA announced its acquisition of arm on the 14th.
It is worth mentioning that if NVIDIA's acquisition of arm can be finally completed, it will also become the largest M & a transaction in the history of semiconductor industry. Prior to this, the transaction of Qualcomm's 44 billion acquisition of NXP was expected to reach the top, but it failed to wait for a paper approval from the regulatory authorities.
NVIDIA's acquisition of arm also added to the global semiconductor M & a market. According to IC insights, an industry analysis firm, the M & a boom in the industry peaked at US $107.7 billion in 2015. In the three years after the peak, the total amount has declined continuously and has been slowing down. However, in 2019, when the market is slightly weak, there are more than 30 semiconductor M & A transactions, including 7 M & A transactions with an amount of more than US $1 billion. Semiconductor M & A activities will pick up in 2019, with a year-on-year increase of 22% to US $31.7 billion.
Make up for the vacancy of CPU and take the ride of arm
NVIDIA's two "big moves" in recent years have clear ideas: previously, it was optimistic about the prospect of data center, and chose to combine with mellanox to strengthen its advantages and layout in this field. The prospect of the deal has been preliminarily verified. NVIDIA's second quarter results released in August showed that its data center business surpassed games for the first time and became the company's largest business segment.
The acquisition of arm is based on the company's trend that "AI is expanding from the cloud to the edge". In this trend, arm's advantages in energy efficiency and other aspects are regarded as the most important. Huang Renxun said that the acquisition of arm is a "once in a lifetime opportunity". The combination of the two sides can give birth to an enterprise with leading AI technology and a wide distribution in various types of computing equipment.
Sheng Linghai, vice president of Gartner research, points out that, thanks to its GPU, NVIDIA has always been very strong in the field of artificial intelligence, but NVIDIA did not have CPU before. Therefore, the acquisition of arm is conducive to its expansion of certain advantages in AI in both terminal and data center fields.
In addition to being dominant in the field of mobile terminals and Internet of things, arm architecture CPU has also begun to make breakthroughs in the field of PC. at the same time, in recent years, a number of manufacturers have launched server CPU based on ARM architecture, which has made great progress in the server chip field dominated by Intel x86 architecture. Through the acquisition of arm, NVIDIA can fill the gap in the CPU field.
"NVIDIA's AI IP can also take arm's" free ride. " Sheng Linghai added. Through this transaction, NVIDIA and arm have reached a licensing agreement, the former technology can be incorporated into arm's IP licensing product portfolio.
Huang Renxun believes that the combination of NVIDIA's AI computing and ARM CPU will make great contributions to the great AI opportunities in the fields of cloud computing, smart phones, personal computers, autonomous driving, robotics, 5g and the Internet of things.
After the news of Softbank's intention to sell arm came out, there was once a rumor that many enterprises, including apple and Samsung, intended to purchase. However, in an interview in mid August, Yao Jiayang, a consulting analyst with Jibang, pointed out that at that time, NVIDIA was the only enterprise still interested in acquiring arm.
He analyzed the reporter of 21st century economic report that the main advantage of the acquisition of arm is that it can first confirm the development blueprint and specification details of arm's IP solutions such as CPU and GPU, so that the buyer can have a more in-depth layout ahead of other competitors in the future product development, and may even lead for at least half a year.
The deal remains controversial
In a telephone interview on the 14th, Sheng Linghai pointed out to the 21st century economic reporter that NVIDIA and arm are two companies with completely different business models; both companies have some monopoly positions in their respective fields, but their business is not identical.
As an important semiconductor IP supplier, arm was acquired by NVIDIA, a chip design company. Whether its cooperation with other chip design companies will be affected has also caused some concerns. Sheng Linghai analysis said that although the acquisition of arm does help NVIDIA positively, it will also cause problems for some of arm's customers.
According to previous media reports, Hermann Hauser, the co-founder of arm, once said that the sale of arm to NVIDIA would be a disaster. Hauser believes that if arm becomes part of NVIDIA, NVIDIA's competitors may choose to seek an alternative to arm.
In this regard, Huang Renxun emphasized several times in his online interview on the 14th that arm's open license business model and customer neutrality are the core of its long-term success. This integration will not change this situation, and arm will continue to provide services to customers in various fields around the world.
On this basis, NVIDIA will expand arm's IP licensing portfolio through its GPU and AI technologies. "Ecosystems on both sides will benefit." He believes that maintaining arm's business model is the best way to maintain arm's success, and thus the best way to ensure that NVIDIA's investment is worth the money.
As part of the deal, arm's business model will not change and will be able to invest more in technology, said Simon segars, arm's chief executive. "We may belong to a different parent company, which has been experienced in the past. But we will still maintain a certain level of independence, which means that we can continue to provide licensing services to the global semiconductor industry. "
In an interview, he revealed that in response to market concerns, he had communicated with many of arm's customers. He pointed out that it was crucial to make it clear to customers over the years that arm's business model would not change and that it would continue to empower them.
Confidence in deal approval
In addition to industry concerns, the sale of arm still requires approval from national regulators in the UK, China, the European Union and the United States. There have been media reports that the acquisition has triggered opposition from the British opposition Labor Party. The labour party believes that this is not in the public interest of the UK and may lead to the loss of jobs.
NVIDIA has promised that arm will continue to be headquartered in Cambridge, UK, its brand and name will be preserved, and a large number of intellectual property rights created each year will continue to be registered in the UK. According to Huang Renxun, NVIDIA will increase its investment in the UK through arm, including building a world-class AI laboratory in Cambridge to attract top talents from the world and further drive the UK to become a global AI highland.
Compared with the British government, the "test paper" in front of the Chinese government is more complicated. Especially in the context of Sino US trade friction, as a British company, arm was acquired by an American company. What impact would it bring. Gu Wenjun, chief analyst of xinmou research, a local industry analyst, said through social media on the 14th: "the reasons for opposing the approval of NVIDIA's acquisition of arm are far more than those of agreeing."
Huang Renxun believes that Chinese regulators will support the deal because it will bring more and better solutions to customers in the Chinese market. For arm China, Huang also stressed that its structure would not be changed by the deal.
Huang Renxun said that if the transaction is not approved, his "plan B" is to continue to do well in NVIDIA itself. He believes that NVIDIA is growing rapidly and has become a leader in the global AI field, and AI is the most important technology in today's era. But he still said he was confident that the deal would be approved by national regulators.
For example, he said that NVIDIA's acquisition of mellanox had just been formally completed not long ago and had been approved by national regulatory authorities, and had gained considerable experience in this area. In his opinion, the acquisition of arm is the same as the acquisition of mellanox. The business between arm and the acquired enterprise is quite different. As a complementary relationship, this combination is good for customers and competition, which should be supported by regulatory authorities.
Huang admitted that it was impossible to predict how long it would take for the transaction to be completed and there was still a lot of content to be communicated with regulators. He revealed in an interview that with the signing of the final agreement on the 14th, he will start a dialogue with government agencies as soon as possible.
When talking about whether the acquisition of arm will bring us export control problems, Huang Renxun said that the acquisition of arm will not change the jurisdiction of ARM technology. "Technology originating in and developing in the UK will continue to be in the UK." "The deal won't change anything for this," Mr. Huang said
Segars explained the details of export controls. He pointed out that the export of any company's products needs to meet the policy requirements of relevant countries. Arm has product research and development in the United Kingdom, the United States, Europe, India and many other parts of the world. When considering which country's export policy restricts its products, it is necessary to comprehensively consider the product content, the design completed by who, and how much research and development time has been invested. These are the elements that determine which country it is subject to export control.
"It depends on the analysis of the product itself. Most of our products are designed in the UK or outside the US, and most of our products are not subject to us export controls. " Segars said arm has put a lot of effort into the analysis to determine how its products will be affected, including whether it will change as the parent company becomes a U.S. company. (Editor: Xin Ling, if you have any questions or suggestions, please contact xinlingfly2007 @ 163. Com)