Nvidia’s CEO Jensen Huang talks about the Arm deal as all but done. But the latest news reports paint a more confusing picture. If there’s one thing, this deal doesn’t exactly have its momentum.
While Americans were heading into their Labor Day holidays, the speculation around Nvidia’s proposed acquisition of Arm got a little crazier and stayed that way. There had always been some worry about China’s enthusiasm for the deal, and then the EU and UK kicked in with some handwringing of their own. Back in February 2021, the US opened an FTC investigation of the deal following objections from Alphabet (Google), Apple, Google, Microsoft, Samsung, and Qualcomm.
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The adventures of the Nvidia–Arm deal have provided plenty of fodder for the enthusiastic fringes of the Tech Press. Semianalysis writer Dylan Patel called Allen Wu’s move to capitalize on Arm China’s majority share of Arm “The Heist of the Century,” and maybe it was. China reportedly pressured Softbank to grant Arm China a majority and Wu used that position to promote his own company Alphatecture and offer shareholders sweetheart deals for Arm parts.
The Register weighed in with a story that Softbank is happy with its working relationship with Arm China. Extreme Tech followed up with their story “ARM China Seizes IP, Relaunches as an ‘Independent’ Company.” Both stories painted Allen Wu as an embattled executive holed up in his office maintaining control of the company.
And Arm, hoping to calm fears, said everything was just fine between headquarters in the UK and the apparent mutiny in China, and that no Arm IP was in danger of being stolen.
You’ve got to admit, stories about drawn-out acquisition deals are rarely this exciting.
More recent reports took some pains to neutralize the news stories. Stories in the Register and Extreme Tech have walked back the more hysterical aspects of the stories. Extreme Tech has offered this retraction: “Not everything in the original article was incorrect.”
Okay, we’ll wait.
Meanwhile back in the UK, the England’s Competition and Markets Authority has long said it’s not feeling great about the Nvidia acquisition because it worries about Arm’s current neutrality—regarding customers and for reasons of national security. Arm has a great deal of insight into mobile phones, automotive technology, game platforms, all sorts of product segments that Nvidia is actively investing in and where British companies have their own interests. Nvidia has promised to respect that neutrality. The BBC reported that over 2000 company leaders petitioned England’s prime minister to stop the deal, worrying UK jobs and influence could be lost. It has also been asked why there wasn’t more concern expressed when Arm was acquired by a Japanese company, Softbank, in the first place and, not to wander too far off the track, why the UK didn’t put up more of a fight at the acquisition of Imagination, a major Arm competitor, by China-based Canyon Bridge Capital Partners.
Adding consequence to that deal, Imagination Technologies just published its innovation manifesto, titled “The UK’s Innovation Future.”
The Nvidia–Arm acquisition isn't doomed yet, but the obstacles standing in its way aren't blowing over. Take, for example, the recent situation with EU regulators wherein Nvidia missed the July boat on paperwork submissions, and then Europe went off for summer vacation. And, by the way, why don’t we have that? (Probably, because most of Europe isn’t having us.)
For what it’s worth, Elon Musk doesn’t like the idea of Nvidia buying Arm either. Arm’s customers just aren’t so sure they want to become Nvidia customers, even if in some cases they already are.
It's been a year since Nvidia announced its plans to buy Arm for $40 billion. Any giant merger like this kicks up a lot of dust and challenges in relationships. Nvidia has created a website to tell its side of the story. In short, Nvidia claims that its acquisition of Arm has the potential to advance technology further. On that site, Huang is quoted: “We are buying Arm because we want to advance computing further. The future of computing is going to move further from the cloud to the edge. That is what Arm is fantastic at. Where we are fantastic is AI. So, imagine the possibilities in putting AI at the edge.”
What do we think?
There’s so much going on right now around this deal, it seemed like a good idea for us to put it down all in one place. We’ve always been excited by the deal, but the reservations have also been obvious. It will transform Nvidia.
Personally, I’ve wondered if Nvidia acquisition of Arm wouldn’t help balance the challenges of dealing with China as that company builds an alternative tech empire to serve its giant economy.