— This is the script of CNBC's news report for China's CCTV on September 15, 2020, Tuesday.
Nvidia's acquisition of Arm from SoftBank, the biggest ever deal in the global chip industry, involved many things. Nvidia and SoftBank are familiar companies, American companies and Japanese companies respectively.
For both major counterparties, many analysts see the deal as a win-win. SoftBank, we know has been shedding and selling assets recently because of investment writedowns and losses. For Nvidia, there is no doubt that it will further consolidate and enhance its leading position in the global chip industry.
After the announcement, we saw Nvidia's shares close nearly 6% higher in trading on Monday, and the CEO couldn't hide his excitement about the deal.
Yeah, this is this is a big deal. I'm just so excited that the opportunity came up and, the vision, the vision is this and we want to build a computing company for the age of AI.
But for Arm, there are more concerns
Arm is headquartered in Cambridge, England. Its chips support most smartphones and other devices in the world. It has always been regarded as a jewel in Europe, especially the British technology industry. Arm was acquired by Japan's SoftBank for $32 billion in 2016 with a precondition that Arm would remain in the UK. Hermann Hauser, the company's co-founder, said it would be a disaster for Arm itself, as well as for the UK and Europe, if it were transferred to Nvidia, the US company. They worry that Nvidia is likely to move Arm to Silicon Valley in the US and become part of Nvidia, which will inevitably lead to a loss of UK jobs and high-technology talent, undermining its competitive edge. In addition, the sheer size of the deal will expose it to antitrust questions from regulators and rivals. China is also one of Arm's key markets, and its joint venture in the country, Arm China, is also crucial. The deal requires regulatory approval in the United Kingdom, The United States, China and the European Union, and in the current relatively complex international environment, some analysts are concerned that the eventual completion of the deal may face some hurdles.
MOOR INSIGHTS&STRATEGY, FOUNDER
I do think that many of Nvidia's direct competitors will say they have issues with this and will try to derail this at the regulatory level
NEEDHAM SR.SEMIS ANALYST
I think it's a risky move but with potential huge uh rewards um if you look at the arm Nvidia combination it's pretty much going to be ubiquitous entity in the semiconductor industry they're going to control pretty much any type of device that's going to be connected to the internet
The latest deal also underlines the wave of consolidation in the global chip industry. We have seen major chip companies accelerate their acquisitions and mergers since 2018. Nvidia alone has had two deals in the past year. Infineon, based in Munich, Germany, and ADI, based in the United States, announced multibillion-dollar deals last year.
Nvidia has developed rapidly in recent years, surpassing Intel in market value in July, and is now worth nearly $320 billion.
Intel's market value is less than $210 billion.
Once Nvidia finally succeeds in acquiring Arm, it will bring greater challenges to Intel, as well as major chip makers such as Apple and Qualcomm, and the overall chip industry landscape will also see a great change. We will also keep a close eye on what happens next.