WEBVTT

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one of the New Year's biggest Tech headlines was how NVIDIA's proposed

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takeover of ARM crashed and burned huge

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deal because it would have made NVIDIA the world's most powerful chip maker so

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um why exactly did the deal fall through well ARM's an incredibly important

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company because it designs chips for lots of other companies instead of

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manufacturing chips for itself ERM licenses its designs out to other firms

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many of whom compete with each other for example Apple and Samsung both own ARM

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licenses even though those two are at Fierce rivals in the smartphone space

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although ARM is a for-profit company like any other their unique position as

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a designer for so many players in the industry has made their neutrality very

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important you know like kind of like Switzerland neutrality and there were

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already some concerns back in 2016 when UK based ARM was sold to their current

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owners SoftBank a Japanese holding company but because SoftBank wasn't

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already in the the business of Chip making the deal eventually went through

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with that incident but the proposed NVIDIA acquisition was very different

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NVIDIA was already one of arms licensees

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and it was directly competing with other companies like AMD and Intel that also

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depend at least partly on arms designs now there are other companies that

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produce chips on a contract basis for its competitors Samsung is a good

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example of this producing chips for NVIDIA but this is more on the

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manufacturing side arms designs are used

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in so many products that if NVIDIA tried to pull a fast one on one of its Rivals

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and restrict access to Armed chips there may not be a clear alternative further

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complicating matters is how big NVIDIA already is without even taking ARM into

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consideration although they might be less of a household name than Intel

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they're actually the second largest chip maker in the world by market

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capitalization which is the total value of all of its outstanding shares in fact

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the market cap is actually larger than AMD and Intel's combined needless to say

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all this got the attention of other large tech companies namely Microsoft

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Google's parent alphabet and Qualcomm who all screamed bloody murder at the

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prospect of having an important source of Chip designs controlled by a direct

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competitor an apple which uses ARM for

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most of its devices already had a frosty relationship with NVIDIA owing in part

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to issues with faulty gpus around 2008 and 2009 Apple systems were among those

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affected and NVIDIA allegedly did not provide adequate monetary support to

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Apple to help fix those problems so would Apple be happy if they had to rely

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on NVIDIA for their new Apple silicon lineup okay so those are the concerns

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but who actually shut the deal down I'll tell you who but first I'll tell you who

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the concerns of NVIDIA's Rivals were very much taken into consideration by

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Regulators in several powerful countries it's hard to hit the west and China to

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agree on anything these days but Regulators from the US the UK the EU and

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China all oppose the deal the Western Powers were primarily concerned about

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the buyout being anti-competitive and possibly unlearning NVIDIA to restrict

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access to chip designs the UK in particular was also worried about its

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own National Security as ARM is based in Britain meanwhile China had its own

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security concerns as it wants to use ARM designs in its own chips and didn't like

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the idea of having to buy them from NVIDIA an American company as if I'm

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losing the market neutrality wasn't already enough so the deal was

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unsurprisingly blocked but what's next for NVIDIA and ARM now NVIDIA is doing

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just fine as a company don't worry about them they're worth over half a trillion

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dollars and all Team Green is really losing is an inroad into the mobile

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market while ARM would have been a very nice ad for NVIDIA the deal's failure

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shouldn't really hurt any of their future prospects too much as for ARM

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well the reason they were interested in becoming part of NVIDIA is because

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designing chips is a difficult expensive process and NVIDIA has well lots of

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money that could back them now that the deal is off it looks like ARM will try

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to raise money through an IPO instead initial public offering which was

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softbank's original fundraising Plan before NVIDIA approached them we could

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speculate on how that will go but this isn't you know investment advice quickie

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thanks for watching guys like dislike check out some of our other videos

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