one of the New Year's biggest Tech headlines was how NVIDIA's proposed
takeover of ARM crashed and burned huge
deal because it would have made NVIDIA the world's most powerful chip maker so
um why exactly did the deal fall through well ARM's an incredibly important
company because it designs chips for lots of other companies instead of
manufacturing chips for itself ERM licenses its designs out to other firms
many of whom compete with each other for example Apple and Samsung both own ARM
licenses even though those two are at Fierce rivals in the smartphone space
although ARM is a for-profit company like any other their unique position as
a designer for so many players in the industry has made their neutrality very
important you know like kind of like Switzerland neutrality and there were
already some concerns back in 2016 when UK based ARM was sold to their current
owners SoftBank a Japanese holding company but because SoftBank wasn't
already in the the business of Chip making the deal eventually went through
with that incident but the proposed NVIDIA acquisition was very different
NVIDIA was already one of arms licensees
and it was directly competing with other companies like AMD and Intel that also
depend at least partly on arms designs now there are other companies that
produce chips on a contract basis for its competitors Samsung is a good
example of this producing chips for NVIDIA but this is more on the
manufacturing side arms designs are used
in so many products that if NVIDIA tried to pull a fast one on one of its Rivals
and restrict access to Armed chips there may not be a clear alternative further
complicating matters is how big NVIDIA already is without even taking ARM into
consideration although they might be less of a household name than Intel
they're actually the second largest chip maker in the world by market
capitalization which is the total value of all of its outstanding shares in fact
the market cap is actually larger than AMD and Intel's combined needless to say
all this got the attention of other large tech companies namely Microsoft
Google's parent alphabet and Qualcomm who all screamed bloody murder at the
prospect of having an important source of Chip designs controlled by a direct
competitor an apple which uses ARM for
most of its devices already had a frosty relationship with NVIDIA owing in part
to issues with faulty gpus around 2008 and 2009 Apple systems were among those
affected and NVIDIA allegedly did not provide adequate monetary support to
Apple to help fix those problems so would Apple be happy if they had to rely
on NVIDIA for their new Apple silicon lineup okay so those are the concerns
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
Regulators in several powerful countries it's hard to hit the west and China to
agree on anything these days but Regulators from the US the UK the EU and
China all oppose the deal the Western Powers were primarily concerned about
the buyout being anti-competitive and possibly unlearning NVIDIA to restrict
access to chip designs the UK in particular was also worried about its
own National Security as ARM is based in Britain meanwhile China had its own
security concerns as it wants to use ARM designs in its own chips and didn't like
the idea of having to buy them from NVIDIA an American company as if I'm
losing the market neutrality wasn't already enough so the deal was
unsurprisingly blocked but what's next for NVIDIA and ARM now NVIDIA is doing
just fine as a company don't worry about them they're worth over half a trillion
dollars and all Team Green is really losing is an inroad into the mobile
market while ARM would have been a very nice ad for NVIDIA the deal's failure
shouldn't really hurt any of their future prospects too much as for ARM
well the reason they were interested in becoming part of NVIDIA is because
designing chips is a difficult expensive process and NVIDIA has well lots of
money that could back them now that the deal is off it looks like ARM will try
to raise money through an IPO instead initial public offering which was
softbank's original fundraising Plan before NVIDIA approached them we could
speculate on how that will go but this isn't you know investment advice quickie
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