As a NVidia shareholder I'm relieved at this. ARM is clearly less valuable as part of NVidia with all the conflicts of interest that entails than as an independent company. NVidia talked about synergies but they could pursue all of those with an architectural license for far less money. It's actually something of a pattern that most mergers fail to provide synergy and destroy value, it's just that they enlarge the empire of the CEO and so seem attractive from that standpoint.
NVIDIA being a well known hostile company, the industry did not miss the news about its ARM purchase intent. And thus they looked for alternatives. That's RISC-V.
Today, pretty much every company designing microcontrollers or SoCs is involved with RISC-V. They won't cancel those efforts to embrace ARM again.
Only two weeks ago SoftBank / Arm / Nvidia made a submission to the UK competition authorities with a singularly pessimistic view of Arm’s prospects as a stand-alone company [1]. I wonder if this was wise given the where the deal seems to be now.
Whilst this is a bit overdone, it does highlight the challenges that Arm faces. If the Nvidia deal is dead - which seems likely - then floating clearly seems unlikely to offer the prospect of the return that SoftBank was expecting when it paid a premium for Arm.
The key question from an Arm user / customer’s perspective seems to be ‘Can Arm as a stand-alone company finance the investment it meets to stay competitive?’
> As Arm’s CEO, Simon Segars, explained: “We contemplated an IPO but determined
> that the pressure to deliver short-term revenue growth and profitability would
> suffocate our ability to invest, expand, move fast and innovate.”
It sounds like Arm needs a change in leadership to me. Find the capital for long-term investment somewhere and follow a path to improvement like AMD did. Yes, there is pressure to deliver short term profit as there always is today. However, that's not a strategy that works for a company like Arm. Everyone around the world can see the value in what Arm produces. Find someone to invest who isn't a hedge fund manager and still sees that value.
> SoftBank / Arm / Nvidia made a submission to the UK competition authorities with a singularly pessimistic view of Arm’s prospects as a stand-alone company
They apparently want to sell the company and benefit from it together ... so it this surprising?
Likely Qualcomm bales them out as they have offered to do so and eventually takes them over quietly by osmosis so no one notices until the deal is done.
It seems crazy to me that Blizzard/Activision is worth more than Arm.
I get BA has tons of world-famous games, but almost every phone on earth is Arm. Arm is taking over laptops and servers too.
Arm has an unusually high relevance/value ratio. As Softbank found out, you can't just ramp up the licence costs. It's also not as scalable as software and doesn't have the revenue of the hardware licensees. I wish it would be bought by an open consortium to protect the millenia of engineering hours from snatch-and-grabs like these or the tyranny of uninformed investors but FAANG et al passed up the chance to secure their computing future last time. They've been blessed with another chance, hopefully this debacle has been eye opening.
I wouldn't be surprised if Arm employees create more value for other companies than they do for Arm.
"Two weeks ago, at the Code Conference, Endeavor CEO Ari Emanuel claimed “the total addressable market of content is infinite.” Netflix is spending $17 billion a year to validate his thesis. So far, they’re both right."
There's really very little "innovation" in the ARM ISA. Or any ISA these days. It is an API. ARMv8 is nice but it's just warmed over RISC -- actually a lot of things that differentiated previous ARM ISAs were removed to make it more like a standard RISC! The value they add is basically nothing except holding the key to being compatible with ARM ecosystem. At this point extracting their tax on their proprietary ISA is close to rent seeking. That drag on the market is why people are looking to real open ISAs.
EDIT: That's not to take away from what architects (ISA designers) do. It's extremely difficult to develop precise and consistent ISAs especially when things like memory ordering, interrupts, pipelined execution, TLBs, etc come in to play. And they are gradually gradually adding features and improving. But this is not value to the tune of over half a billion dollars per year just for ARM licensing (then imagine x86 equivalent numbers for that very locked in ecosystem).
ARM is not in a rosy place with their ISA. Their biggest customers like Apple can and will lift and shift their entire ecosystem if ARM do what it's told. Android could start supporting other ISAs too if someone was motivated enough. And many of ARM's new customers outside the traditional low end embedded world (e.g., in servers) who have been the first ones to move to ARM have done so because their software stacks are very portable. This means they can relatively easily move off ARM as well.
Their logic designs for high performance CPUs don't seem to be top tier either. Not to say that in a disparaging way but for example the PA Semi team Apple bought blew past ARM's high performance mobile designs with their very first ARM core. https://www.anandtech.com/show/6330/the-iphone-5-review/
ARM is pretty decent but behind the likes of Intel, AMD, Apple for high performance cores. So if the ARM market gets bigger and more lucrative especially in the server space, they are vulnerable to other companies selling their own chips and cutting ARM's designs out of the high margin sales. Amazon could be designing their own core right now to use in their ARM servers in a few generations for example. Just as Apple did with its iphone chips. AMD could start making ARM server CPUs if that's where the money is.
This is one of those arguments that the stock market doesn't really align value with social need. Making games is good and all, people like and need entertainment, but from a social perspective we need ARM more than we need Activision.
Microsoft saw how successful sony's strategy of exclusive games was last generation and is copying it to help their SAASification of the gaming market. Microsoft is also well positioned to build a successful VR headset since they control the enterprise productivity software market and can parlay that into hardware employers will buy for their VR meetings. Combining their exclusive games and employer sponsored headsets could lead to Microsoft dominating the VR market.
So really I think the synergy between microsoft and activision is where a lot of the price comes from as opposed to the actual cash flow that activision brings in.
Quick summary on why it matters that Nvidia abandons ARM takeover:
1. ARM doesn't own any factories. Its entire workforce publishes blueprints for making chips (like a software company where the entire asset is intellectual)
2. Buying this type of intellectual asset, means owning and controlling a technology.
3. This also means, all the other customers who depend on this tech (Apple, Samsung, Amazon, pretty much all big tech companies) are now at a disadvantage with NVIDIA as a competitor.
4. China heavily depends on ARM (Huawei, the company's biggest tech manufacturer rely on ARM)
5. This means, the after ARM gets owned by a US company, the US can possibly just cut-off ARM supply to China
6. Since ARM is basically like a software company, it's better to not be owned by a hardware maker. That way, it can prioritize demand from several hardware makers instead of being directed to cater to one market)
(2) "controlling tech" All big players: Apple, Nvidia, Samsung, Amazon, Qualcomm, Intel, .. have so called Architectural license with heavily crafted clauses in them that make them free from Arm control except for some minor details. They use just the instruction set and make their own microarchitecture.
(3) Arm China was robbed from Arm. The CEO stopped taking orders and just kept IP and is running company like their own. Chinese courts did nothing. China does what it wants inside China.
(5) No difference. There are too many cross-atlantic IP and design tool connections. Arm must comply completely to US government sanctions.
(6) Just like Nvidia. Both fabless hw IP companies. Difference is that Nvidia sells chips, Arm sells IP. Nvidia wanted Arm because they want to sell Nvidia IP to others. Nvidia has Arm architecture license, they don't need Arm IP to use Arm.
I am an NVIDIA employee in an unrelated part of the business and not inclined to comment in depth on these matters and this is not an NVIDIA opinion or official but
i thought it worth mentioning
I don’t see the distinction?
NVIDIA is fabless too??
Arm is a British company, currently owned by Softbank, a Japanese company.
This means that in practice the US can already cut off supply to China.
See for example ASML: they are a Dutch company. So the US government only needed a friendly word with the Dutch government for the Dutch government to ban ASML from exporting certain advanced processes to China.
For the British government I'm sure there would be no need to call... A text would suffice ;)
(leaving aside all the drama with ARM China already because of those issues...)
> This means, the after ARM gets owned by a US company, the US can possibly just cut-off ARM supply to China
But IP is very hard to control the supply of, especially one like this where hundreds of companies have a copy of the IP. If the US won't license it on fair terms, China will just stop enforcing IP laws and allow anyone to copy it for free.
Nvidia would be amongst the worst possible custodians of ARM. Their business models are quite strongly opposing:
ARM's is to create a fair, competitive playing field between CPU producing companies and reap licensing fees for the pleasure, Nvidia's is to nakedly leverage all of its technologies for Nvidia's products' benefit and Nvidia's products' benefit only.
With an increasing number of countries worldwide using their powers to prevent the sale or merger of companies, will we see a devaluation of these companies? After all, owning something is only of value if you can sell it, and if you can only sell with permission from 10+ country governments, all of whom can say no for strategic reasons, then it isn't such a great purchase.
China for one won't approve the deal. China is feeling the squeezes of tech cut off. only 3 companies is allowed to make x86. RISC-V is not there yet. the only option left is ARM. huawei's hisilicon was designing top notch ARM cpu for huawei's phone. ARM is just too important for China.
These days, I don’t know if it makes sense at all to get sold out to anyone. Why not IPO? It’s a free never ending river of money that you can dip again and again. With proper voting structure, you retain full control and never fear dilution. Additionally, no dividends ever which means no worries about returning investor money or any real ROI. Over time, get included in one of the ETF index and you are set to unimaginable market caps. Selling out is for the losers, IMO.
It always blew my mind that Arm is worth that much solely licensing intellectual property. Wouldn't it be more cost efficient for some of their biggest customers to simply hire engineers who can produce similar output? Can someone give me insight into their design team?(size, history, experience, etc.)
Would it be way too cynical to suggest that the reason that this deal was/is not likely to close, is because Intel is influentially and aggressively/successfully lobbying against this?
How would smoothing out the current Intel/AMD machine not be healthy overall?
I wonder how the average ARM employee feels about this. Are they losing out on a windfall from their labors because the deal fell through? I wonder if that will affect retention?
[+] [-] Symmetry|4 years ago|reply
[+] [-] snvzz|4 years ago|reply
NVIDIA being a well known hostile company, the industry did not miss the news about its ARM purchase intent. And thus they looked for alternatives. That's RISC-V.
Today, pretty much every company designing microcontrollers or SoCs is involved with RISC-V. They won't cancel those efforts to embrace ARM again.
[+] [-] monocasa|4 years ago|reply
[+] [-] overview|4 years ago|reply
[+] [-] klelatti|4 years ago|reply
Whilst this is a bit overdone, it does highlight the challenges that Arm faces. If the Nvidia deal is dead - which seems likely - then floating clearly seems unlikely to offer the prospect of the return that SoftBank was expecting when it paid a premium for Arm.
The key question from an Arm user / customer’s perspective seems to be ‘Can Arm as a stand-alone company finance the investment it meets to stay competitive?’
[1] https://assets.publishing.service.gov.uk/media/61d81a458fa8f...
[+] [-] 310260|4 years ago|reply
> As Arm’s CEO, Simon Segars, explained: “We contemplated an IPO but determined
> that the pressure to deliver short-term revenue growth and profitability would
> suffocate our ability to invest, expand, move fast and innovate.”
It sounds like Arm needs a change in leadership to me. Find the capital for long-term investment somewhere and follow a path to improvement like AMD did. Yes, there is pressure to deliver short term profit as there always is today. However, that's not a strategy that works for a company like Arm. Everyone around the world can see the value in what Arm produces. Find someone to invest who isn't a hedge fund manager and still sees that value.
[+] [-] karmasimida|4 years ago|reply
They apparently want to sell the company and benefit from it together ... so it this surprising?
[+] [-] varelse|4 years ago|reply
https://www.barrons.com/articles/qualcomm-offers-to-rescue-a...
[+] [-] awill|4 years ago|reply
[+] [-] thrwyoilarticle|4 years ago|reply
I wouldn't be surprised if Arm employees create more value for other companies than they do for Arm.
[+] [-] papito|4 years ago|reply
[+] [-] __s|4 years ago|reply
[+] [-] mbesto|4 years ago|reply
"Two weeks ago, at the Code Conference, Endeavor CEO Ari Emanuel claimed “the total addressable market of content is infinite.” Netflix is spending $17 billion a year to validate his thesis. So far, they’re both right."
https://www.profgalloway.com/stream-on-2/
[+] [-] throwawaylinux|4 years ago|reply
EDIT: That's not to take away from what architects (ISA designers) do. It's extremely difficult to develop precise and consistent ISAs especially when things like memory ordering, interrupts, pipelined execution, TLBs, etc come in to play. And they are gradually gradually adding features and improving. But this is not value to the tune of over half a billion dollars per year just for ARM licensing (then imagine x86 equivalent numbers for that very locked in ecosystem).
ARM is not in a rosy place with their ISA. Their biggest customers like Apple can and will lift and shift their entire ecosystem if ARM do what it's told. Android could start supporting other ISAs too if someone was motivated enough. And many of ARM's new customers outside the traditional low end embedded world (e.g., in servers) who have been the first ones to move to ARM have done so because their software stacks are very portable. This means they can relatively easily move off ARM as well.
Their logic designs for high performance CPUs don't seem to be top tier either. Not to say that in a disparaging way but for example the PA Semi team Apple bought blew past ARM's high performance mobile designs with their very first ARM core. https://www.anandtech.com/show/6330/the-iphone-5-review/
ARM is pretty decent but behind the likes of Intel, AMD, Apple for high performance cores. So if the ARM market gets bigger and more lucrative especially in the server space, they are vulnerable to other companies selling their own chips and cutting ARM's designs out of the high margin sales. Amazon could be designing their own core right now to use in their ARM servers in a few generations for example. Just as Apple did with its iphone chips. AMD could start making ARM server CPUs if that's where the money is.
[+] [-] ashtonkem|4 years ago|reply
[+] [-] colinmhayes|4 years ago|reply
So really I think the synergy between microsoft and activision is where a lot of the price comes from as opposed to the actual cash flow that activision brings in.
[+] [-] JumpCrisscross|4 years ago|reply
Is there a RISC-V analog to Blizzard/Activision?
[+] [-] fomine3|4 years ago|reply
[+] [-] lewisjoe|4 years ago|reply
1. ARM doesn't own any factories. Its entire workforce publishes blueprints for making chips (like a software company where the entire asset is intellectual)
2. Buying this type of intellectual asset, means owning and controlling a technology.
3. This also means, all the other customers who depend on this tech (Apple, Samsung, Amazon, pretty much all big tech companies) are now at a disadvantage with NVIDIA as a competitor.
4. China heavily depends on ARM (Huawei, the company's biggest tech manufacturer rely on ARM)
5. This means, the after ARM gets owned by a US company, the US can possibly just cut-off ARM supply to China
6. Since ARM is basically like a software company, it's better to not be owned by a hardware maker. That way, it can prioritize demand from several hardware makers instead of being directed to cater to one market)
So, all-in-all this is a good thing :)
[+] [-] Nokinside|4 years ago|reply
(2) "controlling tech" All big players: Apple, Nvidia, Samsung, Amazon, Qualcomm, Intel, .. have so called Architectural license with heavily crafted clauses in them that make them free from Arm control except for some minor details. They use just the instruction set and make their own microarchitecture.
(3) Arm China was robbed from Arm. The CEO stopped taking orders and just kept IP and is running company like their own. Chinese courts did nothing. China does what it wants inside China.
(5) No difference. There are too many cross-atlantic IP and design tool connections. Arm must comply completely to US government sanctions.
(6) Just like Nvidia. Both fabless hw IP companies. Difference is that Nvidia sells chips, Arm sells IP. Nvidia wanted Arm because they want to sell Nvidia IP to others. Nvidia has Arm architecture license, they don't need Arm IP to use Arm.
[+] [-] jsiepkes|4 years ago|reply
China has already hijacked the ARM branch in China[1] and taken over ARM's IP.
[1] https://semianalysis.com/the-semiconductor-heist-of-the-cent...
[+] [-] ChuckNorris89|4 years ago|reply
It's is not. Being a fabless designer of hardware IP doesn't make them "basically a SW company".
It's still very much a HW IP company any way you slice it.
[+] [-] fennecfoxen|4 years ago|reply
i thought it worth mentioning
I don’t see the distinction? NVIDIA is fabless too??
(Heck, so is AMD I think)
[+] [-] imron|4 years ago|reply
Good thing ARM China already decided to go its own way [0].
0: https://semianalysis.substack.com/p/the-semiconductor-heist-...
[+] [-] mytailorisrich|4 years ago|reply
This means that in practice the US can already cut off supply to China.
See for example ASML: they are a Dutch company. So the US government only needed a friendly word with the Dutch government for the Dutch government to ban ASML from exporting certain advanced processes to China.
For the British government I'm sure there would be no need to call... A text would suffice ;)
(leaving aside all the drama with ARM China already because of those issues...)
[+] [-] londons_explore|4 years ago|reply
But IP is very hard to control the supply of, especially one like this where hundreds of companies have a copy of the IP. If the US won't license it on fair terms, China will just stop enforcing IP laws and allow anyone to copy it for free.
[+] [-] na85|4 years ago|reply
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] UncleOxidant|4 years ago|reply
[+] [-] newsclues|4 years ago|reply
NVIDIA isn’t a hardware manufacturer.
[+] [-] xaxaxb|4 years ago|reply
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] captainbland|4 years ago|reply
ARM's is to create a fair, competitive playing field between CPU producing companies and reap licensing fees for the pleasure, Nvidia's is to nakedly leverage all of its technologies for Nvidia's products' benefit and Nvidia's products' benefit only.
[+] [-] irthomasthomas|4 years ago|reply
[0] https://news.ycombinator.com/item?id=28329731
[+] [-] d3mon|4 years ago|reply
[+] [-] eatbitseveryday|4 years ago|reply
[+] [-] froggertoaster|4 years ago|reply
Uh, exactly what have Google and Microsoft been up to? I'd say they're "too powerful" at this point...
[+] [-] londons_explore|4 years ago|reply
[+] [-] pseudolus|4 years ago|reply
https://www.bloomberg.com/news/articles/2022-01-25/nvidia-is...
[+] [-] d3mon|4 years ago|reply
[+] [-] TradingPlaces|4 years ago|reply
[+] [-] MangoCoffee|4 years ago|reply
[+] [-] sytelus|4 years ago|reply
[+] [-] intrasight|4 years ago|reply
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] tester756|4 years ago|reply
or
actually state protecting it?
[+] [-] interator7|4 years ago|reply
[+] [-] indigodaddy|4 years ago|reply
How would smoothing out the current Intel/AMD machine not be healthy overall?
[+] [-] 01100011|4 years ago|reply