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Wednesday, December 8, 2021

$40 Billion Arm Deal Between Nvidia And SoftBank

On Sunday, a $40 billion arms deal was announced between Nvidia and SoftBank. As per reports, Nvidia is planning to purchase SoftBank manufactured Arm. If the deal goes through, it will be one of the biggest semiconductor deals in the industry’s history. 

Arm technology has integrated itself in nearly every tech manufacturing brand. Almost all the smartphones today use Arm. Not just that, it is also used for building small chips for computer systems. As per the company, over 180 billion chips with Arm technology have been shipped globally. 

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Nvidia buying Arm technology means that they are focusing on expanding their business of distributing software and chipsets to Data Centers. It will not only boost fast computers but also cloud networks. 

As per investors, Nvidia can integrate its graphics processors with Arm’s CPU technology. It will give them a significant lead from other companies in the semiconductor sector. 

Integrating Arm Technology, A Huge Step For Nvidia

Mark Lipacis, an analyst from Jefferies, also noted that this deal could help Nvidia increase its performance without actually using any additional resources. Furthermore, it will strengthen Nvidia’s business, which will tackle any competitors planning in stealing their assets. 

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On Monday, Nvidia shares saw an increase of 5 percent. Additionally, the pre-market stats on Tuesday show that Nvidia shares rose by 3 percent. It looks like the investors approve and are looking forward to this Arm deal. 

Arm is originally located in Cambridge. They sell blueprints for chips to companies that need them. These chips are used in various tech devices like tablets, smartphones, headsets, speakers, and many more. In simple words, it’s like an instruction manual. Several tech giants like Apple, Samsung, and Qualcomm use Arm technology. 

In 1990, several companies, including Apple, founded Arm because they wanted access to low-power chips. The company sells software, tools, and blueprints to create low-powered chips. In 2019 alone, Arm generated over $1.7 billion. 

Arm made its impact after the advent of smartphones. As the demand for smartphones increased, the demand for low-powered chips increased as well. These chips are different from the ones used for laptops in the sense that they would have as much power but enough to keep a smartphone running for some hours. 

Even the first-ever iPhone used Arm processed chips. 

Huang Says They Could Tap Into Arm’s Customer Base

Now, the importance of Arm has only grown higher. So, it’s no surprise that Nvidia has grand plans that include Arm technology. 

Nvidia’s Data Center sector is one of its most profitable sectors. With $1.7 billion, they reported that the data center alone brought in 45 percent of Nvidia’s sales.

On Monday, Jensen Huang, Nvidia’s co-founder, spoke on the importance of low-powered chips. He predicted the future of AI, which will inevitably integrate chips with AI systems. 

Huang further said that they could create opportunities to sell their AI chips using Arm’s networks. However, it is important to note that several customers of Arm are Nvidia’s competitors. They include Qualcomm, Samsung, Texas Instruments, Broadcom, etc. 

Huang further mentioned that talks with potential customers are ongoing.

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