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Nvidia's Arm Acquisition Expected to Fail, Nvidia Would Lose $1.25B Deposit

Nvidia Arm
(Image credit: Nvidia)

If the murmurings of Bloomberg's sources are to be believed, we are at a very interesting pivot point in the long saga of Nvidia's attempted ~$70 billion acquisition of Arm. The heavyweight financial journal cites two unnamed sources behind its assertions that Nvidia is quietly preparing to abandon its Arm takeover plans. The deal falling through will undoubtedly be particularly painful for Nvidia because it agreed to pay SoftBank Group $1.25 billion if the Arm acquisition failed. Nvidia pre-paid the penalty when the deal was announced.

Bloomberg has a decent track record with behind-the-scenes business information, but as the statements it has received from both Softbank and Nvidia execs attest, work on the deal is still ongoing as both parties still work purposefully to satisfy regulatory checks worldwide.

However, Bloomberg says two key 'people familiar with the matter' have come forward, with background knowledge from Nvidia and Softbank, respectively. From the Nvidia side of the leak, the publication says, "Nvidia has told partners that it doesn't expect the transaction to close." Meanwhile, Bloomberg says the Softbank-related source says that the Japanese tech company is "stepping up preparations for an Arm initial public offering as an alternative to the Nvidia takeover."

Nvidia and Softbank first publicly agreed to the $40 billion deal back in September 2020. At the time, the two parties hoped to close the proceedings within approximately 18 months. Going by that estimate, the deal should have concluded by March 2022, but it became apparent that there were many hurdles in the way of the acquisition.

As well as facing a growth in the intensity of interest by the likes of the US FTC, the UK's CMA, and the European Commission, Bloomberg's sources think China would likely oppose the acquisition and upset the whole carefully balanced applecart.

We got an insight into Nvidia and Softbank/Arm's persuasiveness with regulators a fortnight ago, when the hopeful partners painted a picture of Arm stagnation if Nvidia didn't come to the rescue with its healthy bank balance and R&D resources. The keen-to-be wedded parties even went so far as hinting that Arm would be asset-stripped by investors to make quick gains on the Cambridge-based company's incredibly valuable IP.

(Image credit: Nvidia)

Circling back to today's news, Nvidia and Softbank are sticking to the line that the deal is the best for Arm, for competition, and for innovation in the chip business as a whole. Softbank does have an interest in letting the process play out for as long as possible, with Nvidia shares (part of the deal) having doubled in value since the ink dried on the $40 billion agreement. Nvidia shares have seen a recent dip, but the overall trend remains encouraging and if the deal were to close in several months from now Softbank could realize tens of billions more value from the sale.

The Impetus Behind Nvidia Israel CPU R&D Investments

A week ago, Tom's Hardware reported that Nvidia is hiring "hundreds" of employees in Israel. Nvidia intends to build a Next-Gen CPU Development Group in the increasingly tech-orientated nation. In addition, Israel is the home of Nvidia's $7 billion 2020 acquisition, Mellanox, as well as the site of seven Nvidia research facilities staffed by approximately 2,800 people.

Last week we heard that the hundreds of new employees would be broadly distributed in CPU hardware, software, and architecture disciplines. However, today's report casts a different light on the plans for Nvidia to expand its R&D in CPUs. It might mean the new R&D folks are not necessarily looking at the Arm architecture for Nvidia's next CPU, for example.

Clearly, Nvidia wants to own all the expensive IPs for making computers, from the CPU, GPU, and networking IPs, as well as the software. If the Arm acquisition doesn't go ahead, Nvidia will surely have plan B lined up — if it isn't in action already.

Mark Tyson
Mark Tyson

Mark Tyson is a Freelance News Writer at Tom's Hardware US. He enjoys covering the full breadth of PC tech; from business and semiconductor design to products approaching the edge of reason.

  • -Fran-
    I don't see why nVidia doesn't create their own ISA for CPUs or just, you know, continue using ARM or RISC-V. They just can't fool the people with the magnifier glass scrutinizing their real intentions, so may as well realize they've tried to chew something way bigger than their mouth.

    Plus, whatever they develop, they still have a lot of money to just shove it to Marketing and fool people into using it. Like CUDA. Android can be used on pretty much any underlying ISA as long as they make the JVM work on it, so that's not too hard to do and it just takes time. So, I'm not sure why nVidia is so hard at trying to grab ARM, other than trying to get an unfair advantage over the competition.

    Regards.
    Reply
  • renz496
    -Fran- said:
    So, I'm not sure why nVidia is so hard at trying to grab ARM

    you can stir the direction to your liking when you have the helm. just look at CUDA. nvidia can develop the API freely without any other company complaining it does not go well with their architecture. there are reasons why apple go with their own Metal API and intel with their OneAPI instead of doubling down their effort to support OpenCL more.
    Reply
  • -Fran-
    renz496 said:
    you can stir the direction to your liking when you have the helm. just look at CUDA. nvidia can develop the API freely without any other company complaining it does not go well with their architecture. there are reasons why apple go with their own Metal API and intel with their OneAPI instead of doubling down their effort to support OpenCL more.
    Leaving your snark aside, I am pretty clear on what you mention, hence why mentioned I don't understand and the only reason that comes to mind is just get an unfair advantage.

    Regards.
    Reply
  • VforV
    It's over with Arm acquisition.

    They already are focusing on a new CPU development path in Israel, they're expanding there.

    It was in the news a few days ago.
    Reply
  • InvalidError
    -Fran- said:
    Plus, whatever they develop, they still have a lot of money to just shove it to Marketing and fool people into using it.
    Creating a new architecture in an attempt to secure the entire market for yourself didn't work so well for Intel when it attempted doing exactly that 20 years ago.

    I believe most of the market has gotten fed up with single-vendor proprietary standards. Nvidia spent a small fortune attempting to force people to pay a $100-200 Gsync tax for variable refresh and got crushed by VESA introducing Adaptive Sync to the DP spec, allowing AMD and Intel to provide variable sync for practically free on dozens of monitors within two years, forcing Nvidia to also adopt it.

    While it may still be possible to do your own thing, succeeding as a single-vendor shop where viable cross-vendor options already exist is getting tougher. Even Intel decided to develop most of its Xe image enhancements to be compatible across vendors to help drive adoption instead of pushing its own exclusive hardware-locked thing.
    Reply
  • artk2219
    I'm hoping this merger fails hard, in the words of Linus Torvalds "F*** You Nvidia", hopefully everyone see's through the crap they've been trying to pull. A basic search into their history will show why they shouldn't be allowed to acquire ARM. Frankly their attempted merger has just pushed more people towards developing RISC V chips since Nvidia has a history of not liking to share their toys or play nice with others.
    Reply
  • digitalgriffin
    Invalid is quite correct. NVIDIA has a big uphill battle if they try to force people to adopt a new chip architecture.

    Arm is QUITE efficient. Developing NEW IP that is just as efficient will be difficult without stomping on patents. It was a huge money losing venture by Intel with Atom.
    Reply
  • -Fran-
    InvalidError said:
    Creating a new architecture in an attempt to secure the entire market for yourself didn't work so well for Intel when it attempted doing exactly that 20 years ago.

    I believe most of the market has gotten fed up with single-vendor proprietary standards. Nvidia spent a small fortune attempting to force people to pay a $100-200 Gsync tax for variable refresh and got crushed by VESA introducing Adaptive Sync to the DP spec, allowing AMD and Intel to provide variable sync for practically free on dozens of monitors within two years, forcing Nvidia to also adopt it.

    While it may still be possible to do your own thing, succeeding as a single-vendor shop where viable cross-vendor options already exist is getting tougher. Even Intel decided to develop most of its Xe image enhancements to be compatible across vendors to help drive adoption instead of pushing its own exclusive hardware-locked thing.
    I don't completely disagree, but there's one important difference here:Intel tried to hook up server with the promise of "cross X86". That was their biggest mistake there.

    To ellaborate a bit more: Intel only does X86 (really) and they have no experience or real incentive to move over, no matter what they wanted you to believe back then. Now, nVidia provides solutions which are ISA/CPU independent, as long as they implement whatever API the GPU uses over PCIe and nVidia, obviously, provides the drivers. So, unlike Intel, which only provided the CPU, nVidia can provide vertical elements Intel could not back then and had to work making everything work by themselves while HP tried to sell the stuff. That's why they have their A100's working using ARM or X86 (IIRC). And remember CUDA. Like it or not, nVidia does have a strong hold there. Imagine they get ARM and now their CUDA-capable cards can only work using ARM CPUs because they drop X86 support from it. What would all the people using CUDA would do then? Move all their software that's been working for years to ARM along with all the underlying infrastructure and dev kits associated? What if nVidia can bundle everything for you there for a "modest" fee? And several other very plausible scenarios where nVidia would just squeeze you out until you can't breathe. This last bit is also to explain why I think people blindingly using CUDA are, well, in danger at all times.

    All in all, the cost of aquiring ARM must certainly be cheaper than developing everything from scratch and it would not allow them any unfair advantage, so I'm guessing they won't anyway, heh.

    Regards.
    Reply
  • TJ Hooker
    digitalgriffin said:
    It was a huge money losing venture by Intel with Atom.
    Are you talking specifically about using Atom chips in cell phones/tablets? Because their overall Atom core lineup seems to be doing just fine, given that they're actively expanding its use (i.e. in hybrid designs starting with Alder Lake).
    Reply
  • InvalidError
    -Fran- said:
    To ellaborate a bit more: Intel only does X86 (really) and they have no experience or real incentive to move over, no matter what they wanted you to believe back then.
    Intel wanted the mainstream on IA before 64bits became a necessity on the desktop and was pushing hard to make that happen, at one point selling IA development kits at absurdly low prices to help speed the process along. Then AMD launched the Athlon/Opteron 64bits lineup and the bulk of Intel's prospective IA clients flocked to that, forcing Intel to launch its own x86-64 chips and effectively dooming IA.

    x86 support on Itanium was only intended as a transition convenience so clients don't need to have a separate machine to run legacy x86 stuff on until they get around to porting the code, not performance. Intel did try to scale IA's x86 performance in later CPUs due to intense criticism. At that point though, IA even running native code was much slower than Opterons and it went downhill from there with only the "big-tin" clients who needed IA's more robust RAS creds sticking around.
    Reply