Arm, a British semiconductor and software design company with its global headquarters in Cambridge, UK was sold to US tech company Nvidia at $40 billion on Sunday (13 September), four years after it was bought by Japanese conglomerated Softbank for $32 billion. In the press release, Nvidia said the acquisition would create a “world premier computing company for the age of artificial intelligence (AI)” and promise to keep the brand’s name and its business in the UK.
“We will expand on this great site and build a world-class AI research facility, supporting developments in healthcare, life sciences, robotics, self-driving cars and other fields. And, to attract researchers and scientists from the UK and around the world to conduct ground-breaking work. Nvidia will build a state-of-the-art supercomputer, powered by ARM CPUs (Central Processing Units).” said Jensen Huang, Founder and Chief Executive Officer of Nvidia.
Losing an important piece of British technology
Nevertheless, co-Founders of Arm – Hermann Hauser and Tudor Brown had expressed their concerns about the takeover. All along, Arm is looked upon by many as the “jewel in the crown of the British tech industry” because it manufactures computer chips that power most of the world’s smartphones and electronic devices. Hauser and Brown thought the deal would have an adverse impact on Arm’s business model which involves licensing chip designs to about 500 other companies and some of them are in competition with Nvidia.
Ultimately, “if Arm becomes a subsidiary of a US company, it falls under the Cfius (Committee on Foreign Investment in the United States) regulations,” Hauser told BBC Radio 4’s Today program early on. “(That) means if hundreds of UK companies that incorporate Arm’s (technology) in their products, want to sell it, and export it to anywhere in the world including China – which is a major market – the decision on whether they will be allowed to export it will be made in the White House and not in Downing Street”.
Hauser had put up an open letter to call on the UK Prime Minister Boris Johnson to reverse the merger as he believes Arm should remain neutral. On the other hand, the transaction believes to have elevated Nvidia which has “for decades labored in the shadows of giants like Intel in setting key technical directions for Silicon Valley”. Nvidia is best known for creating chips that help central processors to offload 3D graphics work for better efficiency and most of its clients are gamers or 3D graphics builders.
While gaming remains the core of Nvidia’s business, it has also ventured into other areas in recent years, particularly AI. Researchers found that graphics processors – Nvidia’s forte – would power AI algorithms in a much more efficient manner as compared to older server chips or CPUs.
The Nvidia ambition
In healthcare, Nvidia unveiled a new application development framework last December which allows researchers to co-develop AI solutions without the need to share patients’ data. In May, it announced the expansion of its in-house platform to analyze the whole human genome DNA sequence in under 20 minutes and leverage video analytics and speech recognition technologies to establish smart hospital systems. Nvidia also partnered with the National Institutes of Health (NIH) to study the severity of COVID-19 from chest CT scans.
Some believe the deal will boost Nvidia’s data center business which also turns out to be the company’s fastest growing unit after surpassing its gaming arm for the first time this August. This means it will not be surprising to see more AI related breakthroughs in the coming years. Huang had described his vision to CNBC, “If you think about all the chips that have been shipped, 22 billion chips that were shipped last year, we know very well going forward that AI will be infused into them.”
If we could leverage their (Arm) business model, if we could stand on the network they’ve created and take the technology we’ve invented and put it into that channel and make it available to their thousands of partners, the economics for us would be incredible”. Huang said Arm’s CEO Simon Segars had already spoken with many of its customers about the takeover and Arm will be operating as an independent subsidiary of Nvidia with a “customer neutral” and “open-licensing” model. This means companies can continue paying for Arm’s licence even if they are competing with Nvidia.
“Although nobody likes change, if they realize we’re committed to the business model, we’re committed to openness and fairness, and more than that, we want to keep everything the same, plus we want to add our IP to it, so they can have more to purchase and more value we can deliver to them,” Huang adds.