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Nvidia Acquiring Arm? Potential Chip Merger Implications for Intel, AMD

Nvidia ($NVDA) is in advanced talks to acquire Arm from Softbank, according to a Bloomberg report. However, Software would retain stake in Arm even if it sells part of it to Nvidia or through an initial public offering, according to Nikkei.

A potential Nvidia-ARM merger would likely face intense regulatory scrutiny because of the combined company’s reach across the chip and microprocessor technology markets.

Indeed, Nvidia and Arm together would have reach into such chip markets as gaming, computer graphics, servers, data centers, cloud services and the Internet of Things (IoT). The potential business combination could also further pressure Intel ($INTC), which has stumbled badly with a 7nm processor delay.

Nvidia Acquiring Arm? Potential Timing and Technologies

An Nvidia buyout of ARM could be announced within the next few weeks, though Softbank could seek bids from other suitors if the Nvidia deal doesn’t materialize, the report says. There’s also the possibility that Software will continue to own ARM.

Softbank acquired ARM for $32 billion in 2016. ARM develops microprocessors that are popular in sensors, servers and more. The chip maker has more than 1,000 partners, and an installed base of more tan 160 billion processors.

Nvidia’s technology supports gaming, high-performance computing, autonomous cars, cloud and data center, and more. Nvidia’s revenue was $3.08 billion in the company’s first quarter of fiscal 2021 (ended April 26, 2020), up 39 percent from Q1 of fiscal 2020.

Nvidia and ARM vs. Intel, AMD: Regulatory Scrutiny?

A potential Nvidia-ARM merger announcement would likely trigger close scrutiny from regulators worldwide, especially as governments increasingly express concerns about some Big Tech companies becoming too powerful.

Nvidia’s market capitalization surpassed that of Intel in early July 2020. More recently, Intel has announced a 7nm processor delay and an executive team shakeup.

Fast forward to July 30, and Nvidia is valued at $261.2 billion — compared to Intel’s $204.1 billion, according to SeekingAlpha.

Meanwhile, AMD has rallied amid Intel’s stumble — though AMD would also face new competitive pressures from a potential Nvidia-Arm business combination.

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