We are almost a year after the start of the series of NVIDIA and ARM events where the first wants to buy the second and only has problems in all countries of the world. Nothing less than $40 billion to get their hands on all of their intellectual property, but apparently that couldn’t be closed, as it’s now being reported that Huang could step down given the clashes, which would mean paying a billion dollars in expenses and management at SoftBank. The agreement between NVIDIA and ARM is in play.
18 months is the time NVIDIA said it would take to complete the deal to dominate the overall market which would total 90% of the world’s fleas and in any specific sector. The term ends in March and there are more showdowns than deals, suggesting that NVIDIA cannot acquire ARM and that will come at a cost across the board.
Dizzying figures in the agreement between ARM and NVIDIA
According to reports, the data offered if the deal does not materialize is outrageous: 2 billion that NVIDIA has already paid at the time of signing its agreement with Softbank plus the termination indemnity 1.25 billion in total that they have to pay, whether a deal is made or not.
That is to say, 3.25 billion which can be directly flushed down the toilet if NVIDIA does not reach an agreement with the relevant antitrust agencies, such as those in the EU or the UK. As we saw in the previous chapter of this already drama, NVIDIA continues to defend itself from regulators by arguing different approaches that do not seem to convince said regulators, but the offer still stands:
“We continue to cling to the views expressed in detail in our latest regulatory filings – that this transaction provides an opportunity to accelerate ARM and drive competition and innovation,” said Bob Sherbin, spokesman from NVIDIA.
From SoftBank there is also hope, the problem is that if said agreement is reached and signed, NVIDIA would not only become a competitor as it is currently with all manufacturers, but it would also be a supplier with less competition, only Intel and AMD in their respective ISA standards.
The global semiconductor industry at stake
And it is that here what is at stake is the control and global activity of the entire semiconductor industry, where to remove Intel, TSMC and Samsung from the rest of the companies that depend from ARM would come under the exclusive control of NVIDIA.
Right now, as the chart above shows, NVIDIA is the second largest company in the world by market capitalization, extremely close to TSMC. Imagine that it absorbs a large part of the market capitalization of Broadcom and Qualcomm by going from competitor to chip supplier… It would pass number one with a lot of difference compared to its rivals in said market capitalization.
Neither China, nor the EU, nor the UK, nor even the US seem to have clearly understood this. Qualcomm’s experience in the acquisition attempt NXP Semconductors NV for $44 billion finished in two years of struggles and obstacles that made this giant abandon the water. For this reason and given the time that has passed and the little that remains until March within NVIDIA, it seems that dissenting and defeatist voices are emerging, as well as divisions.
Many are seemingly resigned to defeat, others think it’s possible that with the FTC’s judgment, the criterion that places more merits and benefits on the acquisition than the current state of the two companies be taxed. The main problem is that the United States has vetoed Chinese manufacturers on its territory, such as Huawei, and therefore there is no indication that the Asian government agrees to give the green light. 3.25 billion they can go too far, there are two months left, will they succeed?
