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Early this week I was asked what I thought about Nvidia buying Arm, it seems an almost foregone conclusion by the web that it would since Bloomberg and the Financial Times presumably independently confirmed the courtship.
In an earlier editorial, I responded to the question with I think it's a brilliant move if it can pass all the government agencies that seem to have a say (EU, US, China). There are concerns expressed that Nvidia's competitors would be alarmed and maybe move to RISC-V (which Nvidia also has a stake in) but that would be stupid and Nvidia is no stupid.
Being vertically integrated is where Nvidia is headed. Like Apple, the company wants to control its own destiny, and with Arm, it has all the bits and pieces (other than memory, which has been commoditized) to build and offer high value-add edge and local servers. And, lest we forget, Fujitsu just built a super-duper computer using Arm—Nvidia has a big stake in the HPC market. Then add automotive and you have a virtuous circle…again. Remember, Nvidia just signed a deal with Mercedes which is a top to bottom deal. Arm fits in that master plan perfectly from the server-side for AI training, to the gizmos and gadgets in the car for autonomous driving and pretty dashboards.
The money may be tricky but Nvidia has great credit and a stock that's worth more than Hathaway. I don't see any land mines and only great opportunity.
I was told that I was out of sync with the common wisdom and directed to an article by the highly respected Junko Yoshida of EE Times.
I politely responded that opinions are like noses, everybody has one. Doesn’t change my view, but then I’m a half-full kinda guy. But it did get me thinking.
Arm is definitely up for sale. Softbank paid way too much for it and now with the stock market at a hot point, it would be the perfect time to unload it.
But what if . . .
What if Intel jumped in and snatched it away from Nvidia, just as Nvidia grabbed Mellanox out of Intel’s hands?
Intel would enjoy giving Nvidia its comeuppance, but it would also really like to thwart Nvidia’s drive into what Intel had thought was their domicile, the data center. Intel could also argue to the various governments that Intel already plays the role of Switzerland and shows no favor to any OEM or system builder, and so adding another processor to its stable, as it has been doing with its collection of AI processor, and its alleged GPU, is no big deal.
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That would delight Softbank no end because it adds billions to the sale price. And Intel has much deeper pockets than Nvidia, so a bidding war is not one Nvidia can win.
Strategically, Nvidia could let Intel win and giggle about sucking the life out of Intel’s cash reserves.
Who else could bid for Arm? AMD is flying high at the moment and maybe a logical choice, but financially, they just aren’t in that class. Qualcomm and Samsung are, and so is Sony for that matter.
Playing poker with a multi-billion pot—how freaking exciting is that?