, a Japanese technology group, paid $32bn for Arm in 2016, it was the biggest deal in chipmaking history. That record held until September 13th, when Nvidia, a big American chipmaker, announced its intention to buy the Britain-based chip-designer for $40bn.s: pricey, specialised accelerator chips for gamers and artificial-intelligence number-crunching in data centres.
Arm’s keystone position was SoftBank’s rationale for buying the firm. But it has languished under Japanese ownership. Revenues have stagnated, and the firm has made a small but persistent loss . Geoff Blaber atogear. Arm’s $40bn valuation is only 25% higher than when SoftBank bought it—and just 5% higher if you deduct the $1.5bn Nvidia has offered Arm employees to stop them from leaving and a mysterious $5bn cash or stock payout that SoftBank may qualify for under some conditions.
One motive for Nvidia’s purchase is a desire to expand beyond its existing markets. Arm’s technology could help it build its own versions of the general-purpose processors that power the data-centre computers into which Nvidia’s accelerators are installed, a lucrative market dominated by Intel, the world’s biggest chipmaker by revenue. Nvidia, for its part, hopes that baking itsThose customers, which include Apple, Qualcomm and Samsung, have kept a stony silence.
Nvidia has vowed to keep Arm’s business model intact. Having given such public assurances, says Patrick Moorhead, a chip-industry analyst, Jensen Huang, Nvidia’s boss, is unlikely to risk the opprobrium—or possible lawsuits from aggrieved licensees—that could arise from breaking them. But other analysts point out that Arm’s licensing revenues are, by Nvidia’s standards, small beer.
Regulatory problems loom, too. Britain’s government is in an interventionist mood and is likely to attach strings, such as keeping Arm’s headquarters in the country. China may also object. It is already upset over American attempts to strangle its technology firms . A takeover by Nvidia would bring Arm—a crucial supplier—firmly under American control. Even in normal times, says Mr Blaber, China might balk at such a prospect. It will be even less keen in the middle of a technological cold war.
monopolisation that will destroy industry efficiency
Um.