Buying Arm would give Nvidia firepower against rivals, but a merger would face intense ‘regulatory and customer backlash,’ analysts say (NVDA)

Nvidia CEO Jensen Huang

There’s more speculation that Nvidia would buy Arm, with the Financial Times reporting on Friday that the chip giant plans to offer more than $32 billion for the chip design company.
Such an acquisition would definitely expand Nvidia’s reach in the semiconductor market, giving it more firepower against rivals Intel and AMD, veteran industry analysts told Business Insider.
But such a deal would also face intense regulatory scrutiny, they said, and could hurt Arm’s relationship with existing customers.
“The regulatory and the customer backlash I think will be significant,” Bernstein analyst Stacy Rasgon told Business Insider.
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Speculation that chip giant Nvidia could buy Arm from Softbank intensified Friday with a report that it planned to offer more than $32 billion for the chip design company.

The Financial Times report was greeted with some skepticism by some veteran semiconductor industry analysts, even as they also noted how it could be a game changer for Nvidia.

Buying Arm would give the chipmaker access to highly valuable intellectual property that it could use to take on new markets, including servers and supercomputers, analysts say.

“If Nvidia were to buy it, they would gain significant power in the marketplace,” IDC President Crawford Del Prete told Business Insider. “Nvidia gains the ability to control the source code of Arm, arguably the most popular CPU [computer processing unit] architecture on the planet in terms of volume.”

Arm became a tech powerhouse by introducing a power-efficient chip architecture that became widely used in the mobile market, outpacing semiconductor giant Intel. Arm-based chips have also become important in the data center market.

Arm would also give Nvidia “more control over the direct intellectual roadmap which Nvidia often leverages,” said analyst Ben Bajarin of Creative Strategies Inc.

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“Perhaps they could leverage it to start going after server central processing unit [chips], which is what many have speculated,” he said, which would enable them to take on Intel and AMD in a critical market.

Nathan Brookwood of Insight64, a market research firm focused on the semiconductor industry, said owning Arm would enhance Nvidia’s position in high-performance computing, given the gains of Arm-based processors in that market.

“Tighter integration between Nvidia and Arm could lead to more powerful supercomputers,” he told Business Insider, noting that this could be bad news for Intel. “If Nvidia takes share in this market, it will come at Intel’s expense.”

An Nvidia-Arm merger would “could accelerate the growth of Arm-based PCs,” he added. “This would impact both Intel and AMD.”

But analysts agree that such a deal would be tough to pull off for Nvidia.

The marketplace power Nvidia would gain by buying Arm “would bring into question the idea of fair competition and antitrust,” Del Prete said. Particularly now: Nvidia’s reported interest in acquiring Arm comes amid heightened antitrust scrutiny of the tech industry, underscored by the grilling this this week of the CEOs of Apple, Amazon, Facebook, and Google before the House of Representatives’ antitrust subcommittee.

Bernstein analyst Stacy Rasgon echoed the point, telling Business Insider, “The …read more

Source:: Business Insider


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