Nvidia, Arm deal creates AI, chip powerhouse

Regulatory scrutiny

Nvidia's ambitions with the acquisition hinge on whether regulators approve the deal.

The purchase will face close scrutiny, partly due its size, but largely due to a lack of competition in the processor market, said Alan Pelz-Sharpe, founder of market advisory and research firm Deep Analysis.

That said, he added, the two vendors' markets don't directly overlap, so Nvidia can make a fair argument for the acquisition to go through. Nvidia is among the most dominant vendors in the GPU and AI supercomputer markets, while Arm is a major player in the mobile processor and data center markets, doing business with some of the world's biggest tech companies, including Amazon, Apple, Samsung, and Qualcomm.

AI benefits

Given possible regulatory concerns, it's still unclear how Arm might enhance Nvidia's AI systems, at least at first.

"The question is how much will Arm be left alone to run as a separate company," Pelz-Sharpe said. "Again, due to the size of the deal, the likelihood is that it will run at least for the foreseeable future as a separate concern."

During the media and analyst session, Huang noted that Nvidia will maintain Arm's open-licensing model.

The acquisition will bring Nvidia technology "to a vast network and a vast ecosystem of Arm partners, so that we can help them with accelerated computing so that we can bring AI computing to this ecosystem," Huang said.

The Arm ecosystem is vendor neutral, according to Arm, and how this acquisition will actually affect that ecosystem remains to be seen, said Peter Rutten, research director of infrastructure systems, platforms and technologies at IDC.

"If it ends up impacting the current Arm licensees for data center chips negatively, then a lot of energy will dissipate from the ecosystem, and Nvidia will then end up having to shoulder it mostly alone," he said. "The meat of the deal is giving Nvidia control over a huge portion of the CPU market, especially mobile phones and other devices."

That's where Nvidia will execute a lot of the AI, Rutten said.

"NVIDIA can design and license Arm cores more geared toward AI. It can build more efficient Arm-GPU combinations for data centers, and it can build Arm-GPU combinations for supercomputers," he noted.

Even so, Pelz-Sharpe added that Nvidia will also benefit enormously from Arm's Cambridge location and its access to leading data science experts.

"The two firms together could make the leading [AI] research facility in the world," Pelz-Sharpe said.

Arm CEO Simon Segars referred to the quickly changing technology landscape during the media and analyst call.

"AI really does represent a new frontier that will require new solutions, new technologies, new software, new hardware," he said.

Meanwhile, in an unpredictable development stemming from the perception that a U.S. takeover of a major U.K. company is an affront to British national pride and economic autonomy, an Arm co-founder, Hermann Hauser, launched a campaign to keep Arm independent.