Nvidia’s buy of chip maker Arm sparks market backlash
Nvidia Corp’s deal to acquire Arm Ltd from SoftBank Group Corp for $ 40 billion is likely to face strong opposition from Nvidia’s chip competitors, analysts said, as protests are already being heard in South Korea and China just hours after the deal was announced. vote.
Arm has unprecedented market reach as a provider of designs and intellectual property to much of the global semiconductor industry, licensing its technology to clients such as Intel Corp, Qualcomm Inc and Samsung Electronics Co Ltd, all of which are increasingly competing with Nvidia..
Arm’s open-minded approach to licensing its projects to the public has transformed 160 billion of its technology-based chips into a vast ecosystem of devices ranging from smartphones to smart toasters..
Nvidia’s deal will put Arm under control of the US-based manufacturer amid the battle between the United States and China, which rushes to develop its own semiconductor industry, while US officials seek to stall growth.
Jeff Blaber, Vice President of Research for the Americas at CCS Insights, said the deal «will rightly face tremendous resistance» by Arm clients.
«The Nvidia acquisition will damage Arm and its ecosystem, Blaber said. – Independence is critical to Arm’s continued success, and once it is compromised its value will begin to decline».
CEO of Nvidia Jensen huang and CEO of Arm Simon Segars told Reuters that Nvidia will keep its open licensing model and Arm’s headquarters in the UK, which exempts it from many US export control laws.
Huang also said that Nvidia will expand the model by licensing some of Nvidia’s developments, including GPU technology, through Arm’s network of industry partners. In theory, this move would allow these companies to compete with Nvidia..
«Nvidia has gone to great lengths to emphasize that Arm will continue to act as a neutral supplier, the company should not interfere with any Arm licensing efforts, even if some Arm customers compete with Nvidia.», – stated Linley Gwennap, chief analyst at Linley Group.
But the deal immediately sparked skepticism hours after it was announced..
«China will be against it», – said one executive at a Chinese chipmaker, noting that US companies working with Arm to build server chips would probably have a harder time selling them in China if Arm had a US parent company.
South Korean chip industry officials and pundits said the purchase of Nvidia Arm will increase Nvidia’s competition with Samsung, Qualcomm and other giants for self-driving cars and other future technologies, while raising concerns that Arm could raise licensing fees for competitors..
«Arm Customers May Try Longer-Term Alternatives to Arm», – Reuters source in Korea’s chip industry believes.
Park Jae-gun, The head of the Korea Society for Semiconductors and Display Technologies, said the move marks Nvidia’s attempt to penetrate even deeper into the automotive chip market, where preparations for a breakthrough in unmanned technology are in full swing, and where Samsung and Qualcomm are taking a big step forward..
«Formidable competitor will appear in the market of microcircuits of automobile processors», – said Pak.
CCS Insights’ Blaber believes the deal with Nvidia could also push chip companies towards RISC-V, an open source alternative technology backed by a non-profit foundation and not controlled by any one organization..
A Reuters source at an American company using Arm’s developments said the move is likely to accelerate the industry’s already ongoing transition from Arm to RISC-V technology.. «This will only speed up the process.», – he stated.