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SoftBank’s plan to sell Arm to Nvidia is hitting antitrust wall around the world
- thekyle 6y agoI wonder why they don't just do a direct listing and sell it to retail investors.
- throwaway4good 6y agoThat is a good question; I assume the answer is that they cannot get a 40B valuation if they IPO.
- martinald 6y agoI mean it was valued pretty close to that on the public markets before SoftBank bought it, and tech shares in general have appreciated massively since then, so I think they could get a decent price at IPO.
- throwaway4good 6y agoThat is my intuition too; ARM is a wellknown name and semiconductors is a hot sector at the moment, in particular with a shift away from X86 for personal computing. However they probably cannot sell all the shares at an IPO and get the full 40B in cash which maybe is what SoftBank wants at present.
- Wronnay 6y agoI think they would easily get a 40B valuation on an IPO. People know that ARM is used in all smartphones and after Apples M1 and the growing usage in Servers many believe that ARM is the future. Also - with an IPO, customers of ARM like Apple could easily buy shares of ARM... Probably the reason why Apple didn't bought ARM is because they know they wouldn't get through the competition authorities. But with an IPO, Apple and other customers could buy something like 9 percent of ARM...
- amelius 6y agoThey could also simply hire the ARM employees for a lot less than $40B over the near future.
- kelnos 6y agoThat doesn't really help them all that much, at least not for the reasons why owning ARM could be useful: the IP.
- amelius 6y agoMy understanding was that Apple already reimplemented large parts of the IP and that they are now mostly a licensee of the ISA.
- vinay_ys 6y agoApple's ISA can become more and more divergent from Arm and it wouldn't matter. Apple controls the entire software stack that runs on their hardware.
- amelius 6y agoI think Apple is bound by contract to respect the original ISA (except perhaps the parts they use internally and don't expose external developers to). Forcing external parties to use a translator instead of machine language directly could be one approach to circumvent this.
- thewindowmovie5 6y agoAlso, is not the whole value in using Arm ISA, the ecosystem behind it? If Apple starts diverging from the standard, then it cannot benefit from the existing ecosystem and neither can a software dev say develop on Mac and deploy to graviton. I think it is big lose lose if Apple diverges from standard.
- floatboth 6y ago
- runawaybottle 6y agoYou must have not seen the trajectory equities are on now days. 40b would be an absolute joke to achieve by end of year.
- andy_ppp 6y agoBecause it’s worth more to nvidia would be my guess?
- Ericson2314 6y agoA good indication of an anti-trust violation, if there ever was one!
- macleginn 6y agoBy this logic, every acquisition involving a premium is a an anti-trust violation.
- Ericson2314 6y agoI mean every consolidation is bad for competition in the first order. There are just sometimes higher order ameliorating effects.
- thethimble 6y agoEvery consolidation isn’t necessarily fundamentally bad. Sometimes consolidations result in cost reduction synergies that partially get passed back to consumers. Elimination of inefficiency is good for everyone including the consumer. Of course there’s downsides of consolidation but I think there are upsides too. An example that comes to mind is Tesla’s acquisition of SolarCity. Another is Amazon’s acquisition of Twitch or Google’s acquisition of YouTube (it seems prohibitive to run video streaming services sustainably/profitably without the infrastructure efficiencies of Amazon/Google).
- satellite2 6y agoI think that's exactly what the author meant > consolidation > cost reduction > synergies > passed back to the consumer => second order fucking up your competitors => first order That's generally why you have to guess at the long term effect of any merger. "Will the consumer benefit only in the short term and the diminution of competition will end up hurting them in the long term?" is the question regulators should answer.
- goatinaboat 6y agoThe UK government should buy back ARM, it’s a strategic national asset, as is IMG.
- WJW 6y agoIt's not really "buy back" if you never owned the company in the first place though. In any case that is not really the way western governments handle strategic companies. The US government is not acquiring Intel or Lockheed any time soon, they just limit where it can export their products to.
- jayflux 6y ago> The US government is not acquiring Intel or Lockheed any time soon Well that's because the US government aren't worried about Intel being acquired by anyone else outside of the US anytime soon. Secondly, there's enough competition in the valley that even losing Intel wouldn't be a disaster for the US. The 2 situations aren't really the same.
- kelnos 6y agoSure, but there are other, much more politically tenable ways to keep Intel under US ownership than nationalizing the company.
- guerrilla 6y ago> In any case that is not really the way western governments handle strategic companies. Except for in Scandinavia where that is how they do (more so in the past than now.)
- LatteLazy 6y agoThe UK govt is made up of the people too stupid to refuse the job after the brexit vote. Their strategy is to hold on really tight, do nothing and hope their problems go away while awarding their friends massive no bid government contracts to do nothing. Im not just bring pejorative, come and take a look. The first thing PM did after the vote was resign. Theresa May took over and couldn't make it work. Now we have BoJo the Clown and he won because the oppositions best candidate was all but a communist who wanted to shut down most of the banks and all go back working in factories. BoJo's never had any strategy beyond opportunistism. That won't really work in this circumstance. Except that the sale could probably be approved if ARM spent £100m on "consulting" from a tory donor?
- throwaway4good 6y agoWhy would the Chinese authorities accept this deal if it means ARM will be on American hands and thus subject to arbitrary export controls (as examplified with Huawei, now possibly Xiaomi)?
- vermilingua 6y agoBecause SoftBank is Japanese and they’d have no choice?
- ginko 6y agoYou're severely underestimating the Chinese government's ability to sanction nvidia and softbank if they went forward without their approval.
- mbit8 6y agoin which way? china seems more like a toothless tiger in this regard
- ginko 6y agoAccording to this[1] 30% of Nvidia's sales are in China. Arm's numbers are similar. If China banned the sale of Nvidia GPUs or added some punitive tariff that'd hurt quite a bit. [1] https://www.thestreet.com/investing/stocks/nvidia-diversifying-away-from-china-smart-device-platform-15141993 https://www.thestreet.com/investing/stocks/nvidia-diversifyi...
- jackjeff 6y agoBut does China have an alternative to ARM CPUs and NVIDIA GPUs? They tried blocking Github in the past and it did not actually work well. I imagine something like blocking the production lines of multiple factories would just ensure that these are relocated elsewhere.
- gigatexal 6y agoGood I hope the whole sale fails
- askjdlkasdjsd 6y agoImagine working hard your whole life that you get to a point that most cannot even dream of getting to and having some schmuck on an online forum who knows nothing other than some headline hoping that you would fail. It appears the trend is becoming that just by being negative and short on everything is some kind of lazy hack to appear intelligent.
- Ericson2314 6y agoYour peddling of nonsense while taking the moral high ground is sickening: 1. https://en.wikipedia.org/wiki/Arm_Ltd.#Founding https://en.wikipedia.org/wiki/Arm_Ltd.#Founding this is no startup with some glorious founder-lifer figure trying to cash out into retirement. 2. Even if it was, rampant acquisitions are terrible for society, and we shouldn't let startups off easy for cashing out. The just costs are just too high. (Yes, appealing to self sacrifice that leads to coordination failure, but some sort of pact among startups to merge with each other rather be bought by the monopolists along with sane anti-trust would do the trick.)
- intrasight 6y agoHe's just expressing his opinion and it one likely shared by many other people.
- tsomctl 6y agoAre you annoyed that he's being negative, or because he didn't back it up with a reason? Because I've done development both for embedded arm microcontrollers and CUDA. ARM feels like a benevolent overlord that wants to help you. Documentation is open, compilers are easily accessible, there's lots of random blogs with best practices on how to do common operations. Nvidia feels like their entire goal is to extract as much money out of you as they can. I'm not hoping ARM fails. I'm hoping the sale fails, because if the sale succeeds, ARM will fail.
- aurizon 6y agoRecall how Intel was dictatorial in levering the 286 architecture into all the LSI chips that board makers needed. How Intel extorted the market price wise until regulators forced a way for AMD to compete and how the decline and fall of Intel thus came to pass? Now think what could happen of Nvidia owned ARM, Apple would soon feel the screws. as would all the ARM using group as Nvidia would flay them to the bone to get that $40 billion it went into debt to get back so it can throw the money lenders off their back. Rates will rise, and the screws Nvidia would feel would go through them and into all their clients. Since it is a software-like business, it would not be easy for others to repeat what they did to compete.
- lotsofpulp 6y ago> Now think what could happen of Nvidia owned ARM, Apple would soon feel the screws. as would all the ARM using group as Nvidia would flay them to the bone to get that $40 billion it went into debt to get back so it can throw the money lenders off their back. Why would Nvidia be able to sell to Apple at a higher price than the price ARM is currently selling at to Apple?
- aurizon 6y agoIf Nvidia instructs ARM to do so, as 100% owner...
- stevehawk 6y agoapple has a forever license on ARM, nvidia can't do anything about that
- aurizon 6y agoIs the fee also fixed?
- lotsofpulp 6y agoWhy would ARM (Softbank) not already be asking for as much money as Apple is willing and able to play?
- wyuenho 6y agoI don't understand why Softbank won't just put it back to the public market and list on the LSE.
- ryebit 6y agoGood Lord, that's a great idea. They'd be able to sell the shares in no time. Soon as it hits public I'm sure a ton of folks who just invest in everything semiconductor would just jump in. I've been avoiding SoftBank because they've got so many other risky ventures, putting money in company at large seems kinda volatile.
- burgerquizz 6y agoI've been checking the semi conductor space. What semi companies aren't overvalued with a decent P/E ratio right now? Was thinking to just take an ETF like SMH[1], but wondering if there were a better choice. TSMC, Applied Materials, ASML, Nvidia, etc... had crazy run and I'm wondering if they can keep growing that much in the next years. [1] https://www.vaneck.com/etf/equity/smh/holdings/ https://www.vaneck.com/etf/equity/smh/holdings/
- selectodude 6y agoIntel is still rather undervalued. PE of 11, huge amounts of cashflow, one big chip win and they're back.
- mirekrusin 6y agoIntel just lost all engines in-flight. They're still flying, yes, but gravity will do its thing.
- riking 6y agoYeah, Intel needs some major direction changes before I'll be comfortable investing in them.
- robert_foss 6y agoI can think of no worse owner of ARM in this industry, with the possible exception of Qualcomm. If NVidia indeed wants to have a real foothold in the CPU space, we would all be much better off if they went the RISC-V route.
- nicoburns 6y ago> we would all be much better off if they went the RISC-V route Or indeed just license ARM like everyone else. It's not like they can't use ARM without buying them.
- dralley 6y agoNvidia already has an ARM license, even.
- DaiPlusPlus 6y agoAnd despite that, Tegra isn’t all that great compared to Qualcomm and Apple. Why can’t NVIDIA make their own M1 competitor as it is right now?
- abainbridge 6y agoBecause that requires investment. If they make that investment and are wildly successful at taking market share from x86 then ARM will become a much more valuable company. Buying ARM allows Nvidia to capture that value. This is a real problem when some of that investment is porting/tuning various open source projects to make them run well on ARM. Such work would benefit the whole ARM ecosystem, including competitors who sell ARM based chips. At which point, owning ARM starts to look sensible.
- ksec 6y agoHaving an ARM license has zero relationship with performance. An ARM license is only for unit cost benefits. Nothing else.
- Abishek_Muthian 6y ago>In announcing the agreement, the two companies, citing a need to get the green light from regulators in many countries, including the U.K., China, the European Union and the U.S., It's hard to believe U.S. authorities weren't consulted by Nvidia before taking credible action towards this deal, I doubt whether there will be even real hurdles from the Govt. for Nvidia as ARM is a strategic asset. For the same reason, I don't see hurdles from U.K., EU to last long either. But there's a new administration now and if anti-trust did take it up due to pressure from Apple, Qualcomm and likes then there will be real test between free-market regulations vs national interest.
- nabla9 6y agoThe deal is not finished. It has explicit condition covering disapproval. Nvidia buys ARM only if the deal gets regulatory approvals approvals. If not, the deal is off. >The proposed transaction is subject to customary closing conditions, including the receipt of regulatory approvals for the U.K., China, the European Union and the United States. Completion of the transaction is expected to take place in approximately 18 months. https://nvidianews.nvidia.com/news/nvidia-to-acquire-arm-for-40-billion-creating-worlds-premier-computing-company-for-the-age-of-ai https://nvidianews.nvidia.com/news/nvidia-to-acquire-arm-for...
- klelatti 6y agoIf Nvidia saw the opportunity to buy Arm they would make an offer and then try to get through antitrust regulators - and regulators very unlikely to give a green light in advance of a deal being announced. The UK regulator has already set out very credible reasons why the deal might be objectionable in advance of doing their investigation - and those same reasons apply in the US and EU too - so every reason why https://www.gov.uk/government/news/cma-to-investigate-nvidia-s-takeover-of-arm https://www.gov.uk/government/news/cma-to-investigate-nvidia...
- mromanuk 6y agoI hope Arm continue to be independent, it's too important
- Ceezy 6y agoYou got to love Masa Son but he is really pulling strange moves lately... ARM is doing really cool stuff merging them with NVIDIA is a terrible idea.
- klelatti 6y ago> The CMA will look at the deal’s possible effect on competition in the UK. The CMA is likely to consider whether, following the takeover, Arm has an incentive to withdraw, raise prices or reduce the quality of its IP licensing services to NVIDIA’s rivals. This is from the UK's Competition and Markets Authority (UK's antitrust regulator) web page [1] on this takeover and captures the key issue precisely. Nvidia has every incentive withdraw, raise prices or reduce the quality of its IP licensing services to NVIDIA’s rivals because this would help NVIDIA's own products (current and future) and NVIDIA makes a lot more on its own products than Arm makes on licenses. I'd also add that there is almost no way that this could be properly policed post takeover. [1] https://www.gov.uk/government/news/cma-to-investigate-nvidia-s-takeover-of-arm https://www.gov.uk/government/news/cma-to-investigate-nvidia...
- skibz 6y agoI couldn’t find a link to Hermann Hauser’s open letter to the UK prime minister in the article. Here it is: https://www.savearm.co.uk/ https://www.savearm.co.uk/
- klelatti 6y agoThanks. Interesting proposal at the end: > The obvious and highly desirable alternative to the Nvidia deal is for the government to use its convening power to lead a syndicate of ARM licensees, UK pension funds and other institutions to take ARM public on the LSE + NYSE or Shanghai Star market and take a golden share so that we are never again in this invidious situation of having to fight to keep our own UK technology assets.
- ausjke 6y agoSuppose if the sale did not succeed, what will happen to Nvidia's high-flying stocks partially caused by this merger? I don't own Nvida stocks, just be curious
- 01100011 6y agoIIRC, the stock is actually down since the announcement. Nvidia is buying ARM because of its high stock price. The stock already ran up thanks to the AI boom. Honestly, I work at NVDA and I think the deal is dumb. I don't see what benefit it brings to us. The industry is beginning to move away from ARM, so buying yesterday's technology seems like a bad move.
- ausjke 6y agoYou're right, it does not seem ARM-acquisition helped or damaged NVDA stock both ways over the past 5 months. "Moving away from ARM", to where? X86 does not seem like a good destination, RISC V is not there, MIPS/AI-chips etc are not a trend either, I honestly don't know where else the CPU industry can move to.
- noncoml 6y agoWhat’s in your opinion the reason Arm became the defacto choice for embedded systems? (And now making ways to general computing) In what ways was it so much better than MIPS that it virtually wiped it off the board?
- klelatti 6y agoYou can hear it from John Hennessey of MIPS fame himself. "We made a mistake. We didn't realise how important the cellphone market was" https://youtu.be/3paiCK3dlK0?t=3016 https://youtu.be/3paiCK3dlK0?t=3016
- noncoml 6y agoVery interesting, thanks. The guy to the right of him is completely in denial. He was so confident MIPS "will win in the end"
- klelatti 6y agoInterestingly, I think Arm has become more MIPs like over the years - dropping some of the features that made it distinctive. In the 'Arm edition' of the Patterson and Hennessey book there is a slightly wistful comment that Arm now looks a lot like the original MIPS - so maybe MIPS has won after all!
- klelatti 6y agoJust to add on a more detailed level I think it was Thumb with its better code density that first got them into (Nokia) cellphones. Also, I think Arm long explicitly avoided competing with Intel which they saw (then) correctly as a losing strategy.
- jononor 6y agoThe fact that many semiconductor different companies brought ARM based products to market, each with their own set of peripherals, hardware reference designs and SDKs targeting different verticals (in different ways). This huge variety of available off-the-shelf designs makes it possible to make cost-effective products with low investments and fast time-to-market. A CPU core alone is not enough, one needs the ecosystem and ARM understood that from very early on.
- pid_0 6y agoGood, as it should. No company that competes with ARM customers should ever own ARM.
- varispeed 6y agoIt's like selling it to Apple. I hope this will be stopped.
- naruvimama 6y agoARM's revenue is stagnant. it may not be a sustainable business on it's own. Nvidia wants access to ARM's large customer base to sell it's own IP in GPU, AI accelerators. Intel had a dominant position x86 for decades which they also licensed to AMD. However, today we have open RISCV, open MIPS & several huge tech giants and cloud computing providers willing to invest in these alternatives. Not to mention that several of these like Apple have a perpetual ARM license which will not be affected by this acquisition. This should be a welcome move especially for those who are looking for greater investments in RISCV.
- klelatti 6y agoSo you're saying it's great because Arm's customers will be forced to abandon their investment in Arm products. In other words dreadful for Arm's customers and their end users. (I want RISC-V to succeed but this isn't the way to do it)
- deleted 6y ago[deleted]
- crb002 6y agoIf they want liquidity, sell 2/3 on the open market. Allow NVIDIA etc to buy up to 10% with their own stock instead of cash. Softbank isn't going to clear regulatory hurdles in a monopoly premium sale.