{"video_id":"fp_7kSY5fFm64","title":"TQ: NVIDIA's Biggest Failure","channel":"Techquickie","show":"Techquickie","published_at":"2022-03-04T17:00:00.055Z","duration_s":264,"segments":[{"start_s":0.0,"end_s":4.72,"text":"One of the New Year's biggest tech headlines was how NVIDIA's proposed to take over of","speaker":null,"is_sponsor":0},{"start_s":4.72,"end_s":11.84,"text":"ARM crashed and burned. Haha, huge deal, because it would have made NVIDIA the world's most powerful","speaker":null,"is_sponsor":0},{"start_s":11.84,"end_s":19.04,"text":"chip maker. So, um, why exactly did the deal fall through? Well, ARM's an incredibly important","speaker":null,"is_sponsor":0},{"start_s":19.04,"end_s":23.84,"text":"company because it designs chips for lots of other companies. Instead of manufacturing chips","speaker":null,"is_sponsor":0},{"start_s":23.84,"end_s":29.68,"text":"for itself, ARM licenses its designs out to other firms, many of whom compete with each other.","speaker":null,"is_sponsor":0},{"start_s":30.0,"end_s":35.52,"text":"For example, Apple and Samsung both own ARM licenses, even though those two are at fierce","speaker":null,"is_sponsor":0},{"start_s":35.52,"end_s":39.92,"text":"rivals in the smartphone space. Although ARM is a for-profit company like any other,","speaker":null,"is_sponsor":0},{"start_s":39.92,"end_s":45.28,"text":"their unique position as a designer for so many players in the industry has made their neutrality","speaker":null,"is_sponsor":0},{"start_s":45.28,"end_s":50.0,"text":"very important. You know, like, kind of like Switzerland neutrality. And there were already","speaker":null,"is_sponsor":0},{"start_s":50.0,"end_s":55.52,"text":"some concerns back in 2016 when UK-based ARM was sold to their current owner, SoftBank,","speaker":null,"is_sponsor":0},{"start_s":55.6,"end_s":61.52,"text":"a Japanese holding company. But because SoftBank wasn't already in the business of chip making,","speaker":null,"is_sponsor":0},{"start_s":61.52,"end_s":66.64,"text":"the deal eventually went through with that incident. But the proposed NVIDIA acquisition","speaker":null,"is_sponsor":0},{"start_s":66.64,"end_s":72.32,"text":"was very different. NVIDIA was already one of ARM's licensees, and it was directly competing","speaker":null,"is_sponsor":0},{"start_s":72.32,"end_s":77.92,"text":"with other companies like AMD and Intel that also depend at least partly on ARM's designs.","speaker":null,"is_sponsor":0},{"start_s":77.92,"end_s":82.4,"text":"Now, there are other companies that produce chips on a contract basis for its competitors.","speaker":null,"is_sponsor":0},{"start_s":82.4,"end_s":87.12,"text":"Samsung is a good example of this, producing chips for NVIDIA. But this is more on the","speaker":null,"is_sponsor":0},{"start_s":87.12,"end_s":93.44,"text":"manufacturing side. ARM's designs are used in so many products that if NVIDIA tried to pull a","speaker":null,"is_sponsor":0},{"start_s":93.44,"end_s":99.2,"text":"fast one on one of its rivals and restrict access to ARM chips, there may not be a clear alternative.","speaker":null,"is_sponsor":0},{"start_s":99.2,"end_s":104.72,"text":"Further complicating matters is how big NVIDIA already is, without even taking ARM into consideration.","speaker":null,"is_sponsor":0},{"start_s":104.72,"end_s":109.2,"text":"Although they might be less of a household name than Intel, they're actually the second largest","speaker":null,"is_sponsor":0},{"start_s":109.2,"end_s":114.0,"text":"chip maker in the world by market capitalization, which is the total value of all of its outstanding","speaker":null,"is_sponsor":0},{"start_s":114.0,"end_s":121.84,"text":"shares. In fact, the market cap is actually larger than AMD and Intel's combined. Needless to say,","speaker":null,"is_sponsor":0},{"start_s":121.84,"end_s":127.28,"text":"all this got the attention of other large tech companies, namely Microsoft, Google's parent","speaker":null,"is_sponsor":0},{"start_s":127.28,"end_s":134.0,"text":"Alphabet, and Qualcomm, who all screamed bloody murder at the prospect of having an important","speaker":null,"is_sponsor":0},{"start_s":134.0,"end_s":139.76,"text":"source of chip designs controlled by a direct competitor. And Apple, which uses ARM for most","speaker":null,"is_sponsor":0},{"start_s":139.76,"end_s":145.28,"text":"of its devices, already had a frosty relationship with NVIDIA, owing in part to issues with faulty","speaker":null,"is_sponsor":0},{"start_s":145.28,"end_s":151.52,"text":"GPUs around 2008 and 2009. Apple systems were among those affected, and NVIDIA allegedly did not","speaker":null,"is_sponsor":0},{"start_s":151.52,"end_s":157.44,"text":"provide adequate monetary support to Apple to help fix those problems. So would Apple be happy if","speaker":null,"is_sponsor":0},{"start_s":157.44,"end_s":162.64,"text":"they had to rely on NVIDIA for their new Apple Silicon lineup? Okay, so those are the concerns.","speaker":null,"is_sponsor":0},{"start_s":162.64,"end_s":167.44,"text":"But who actually shut the deal down? The concerns of NVIDIA's rivals were very much taken into","speaker":null,"is_sponsor":0},{"start_s":167.44,"end_s":172.72,"text":"consideration by regulators in several powerful countries. It's hard to get the West and China","speaker":null,"is_sponsor":0},{"start_s":172.72,"end_s":179.12,"text":"to agree on anything these days, but regulators from the US, the UK, the EU, and China all opposed","speaker":null,"is_sponsor":0},{"start_s":179.12,"end_s":183.44,"text":"the deal. The Western powers were primarily concerned about the buyout being anti-competitive","speaker":null,"is_sponsor":0},{"start_s":183.44,"end_s":188.48,"text":"and possibly allowing NVIDIA to restrict access to chip designs. The UK in particular was also","speaker":null,"is_sponsor":0},{"start_s":188.56,"end_s":193.6,"text":"worried about its own national security as ARM is based in Britain. Meanwhile, China had its own","speaker":null,"is_sponsor":0},{"start_s":193.6,"end_s":199.12,"text":"security concerns as it wants to use ARM designs in its own chips, and didn't like the idea of having","speaker":null,"is_sponsor":0},{"start_s":199.12,"end_s":205.44,"text":"to buy them from NVIDIA, an American company, as if ARM losing the market neutrality wasn't already","speaker":null,"is_sponsor":0},{"start_s":205.44,"end_s":211.76,"text":"enough. So the deal was unsurprisingly blocked. But what's next for NVIDIA and ARM? Now NVIDIA is","speaker":null,"is_sponsor":0},{"start_s":211.76,"end_s":217.52,"text":"doing just fine as a company, don't worry about them. They're worth over half a trillion dollars,","speaker":null,"is_sponsor":0},{"start_s":217.52,"end_s":222.08,"text":"and all team green is really losing is an inroad into the mobile market. While ARM would have","speaker":null,"is_sponsor":0},{"start_s":222.08,"end_s":227.52,"text":"been a very nice ad for NVIDIA, the deal's failure shouldn't really hurt any of their future prospects","speaker":null,"is_sponsor":0},{"start_s":227.52,"end_s":232.24,"text":"too much. As for ARM, the reason they were interested in becoming part of NVIDIA is because","speaker":null,"is_sponsor":0},{"start_s":232.24,"end_s":239.44,"text":"designing chips is a difficult, expensive process. And NVIDIA has, well, lots of money that could","speaker":null,"is_sponsor":0},{"start_s":239.44,"end_s":244.32,"text":"back them. Now that the deal is off, it looks like ARM will try to raise money through an IPO","speaker":null,"is_sponsor":0},{"start_s":244.32,"end_s":249.84,"text":"instead, initial public offering, which was SoftBank's original fundraising plan before NVIDIA","speaker":null,"is_sponsor":0},{"start_s":249.84,"end_s":256.16,"text":"approached them. We could speculate on how that will go, but this isn't, you know, investment","speaker":null,"is_sponsor":0},{"start_s":256.16,"end_s":260.56,"text":"advice quickie. Thanks for watching guys, like, dislike, check out some of our other videos,","speaker":null,"is_sponsor":0},{"start_s":260.56,"end_s":264.08,"text":"comment with some video suggestions down below, and don't forget to subscribe and follow.","speaker":null,"is_sponsor":0}],"full_text":"One of the New Year's biggest tech headlines was how NVIDIA's proposed to take over of ARM crashed and burned. Haha, 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, ARM 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 owner, SoftBank, a Japanese holding company. But because SoftBank wasn't already in 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 ARM's licensees, and it was directly competing with other companies like AMD and Intel that also depend at least partly on ARM's 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. ARM's 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 ARM 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. And 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? The concerns of NVIDIA's rivals were very much taken into consideration by regulators in several powerful countries. It's hard to get the West and China to agree on anything these days, but regulators from the US, the UK, the EU, and China all opposed the deal. The Western powers were primarily concerned about the buyout being anti-competitive and possibly allowing 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 ARM 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, 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. Thanks for watching guys, like, dislike, check out some of our other videos, comment with some video suggestions down below, and don't forget to subscribe and follow."}