I have not seen this coming, but it may make perfect sense in thinking. There may be a shift in the computer components industry in the near future, which may be the biggest shock since AMD’s purchase of Ati in 2006. Graphics card giant Nvidia is considering the option to take over the chip designer arm, this latest report from Bloomberg.
As always with such reports, it’s probably best to take them with a pinch of salt until they’re done. Even if both parties were willing to make this acquisition, various legal and regulatory processes would have to be completed before things were set in stone.
Arm is based in the UK, but was bought by the Japanese technology group SoftBank in 2016. According to reports, SoftBank now wants to sell, and it would be quite logical to imagine that Nvidia would be interested in buying. Arm is the developer of CPU cores that power millions of modern devices. Arm-based chip designs are used in phones, tablets, chromebooks, set-top boxes, smart TVs and many other product categories.
Nvidia has already integrated chips designed by Arm into its hardware stack, with the Tegra SOC series using arm-based processor cores. The Tegra chips are used in devices such as phones and tablets, but also in vehicles, the Nintendo Switch and set-top boxes.
Apart from the existing product range, which shows some synergies with arm, this would also absolutely strengthen Nvidia’s strategic position in the future if they had a certain degree of control over the CPU production. Arm-based chips will power Apple devices at least for the next generation, with not only their iPhones and iPads using arm-based chips, but also the news that they’ve started putting their Mac and Macbook lines on them to rearrange the architecture. According to Bloomberg, Apple has been asked to make an offer for poor. However, they refused to do so and instead opted to continue to license arm-chip designs for their home-made processors.
Microsoft has also shown signs of securing its bets that arm-based devices could be the future of computing as they have worked hard to make Windows on Arm more profitable. It’s not there yet, but it’s not crazy to imagine a world where Windows on Arm devices could become commonplace.
Why should Nvidia be interested in buying arm?
If Nvidia wants to continue to grow beyond the pure graphics card company, this step makes perfect sense and would bring them to the top of the market sectors in which they are now a small player, especially in mobile devices. This would also put them in an excellent position to control all the important hardware that could get into the laptops and desktops of tomorrow.
It’s unclear whether this would have an immediate impact on their business as a GPU maker, but we can’t imagine their dominance in high-end consumer gaming cards will be seriously challenged in the near future. AMD has struggled to keep up with Nvidia in recent years, and it seems that Intel has been talking about game-level graphics hardware manufacturing for years, but it’s not something they provided.
As with any major potential acquisition like this, there will be concerns about whether this could result in a company having too much power, and I don’t think these concerns would be unfounded in this case. Whether such a deal would be subject to regulatory control would depend to some extent on the degree of monopolistic control the resulting combined company would have, and in that case the answer would be “yes, probably some monopolistic control”.
Until anything is officially announced, it is probably best to submit it under “Wait and See What Happens”, where these types of deals can be a bit in the air. Given these enormous sums of money, power, and possibly even ego, large tech acquisitions are not always a straightforward process. This would leave Nvidia as a massively powerful company in the computing world, and there are many interesting future product opportunities that could make this acquisition easier, but there would also be many risks.