Nvidia became the largest US chipmaker by market value in July, passing the industry titan Intel. However, the company could rank first in the sector.
Nvidia announced a $40 billion deal with private company Arm Holdings. Arm’s business is unusual because it only creates the chip architecture. The business model is based on licensing fees and royalties.
Arm doesn’t build anything, but its chip designs are used on almost every mobile phone, as well as on data center processors, storage devices, and personal computers.
“There are more processors in the world designed by Arm than by anyone other than Intel,” said Pedro Domingos, a professor of computer science at the University of Washington, cited by Marketwatch.
Arm has been successful largely because its chip architecture requires less power than chips from Intel and others. And because Arm doesn’t make or sell chips, customers have long thought it’s a neutral part of the industry.
Nvidia shares rose 5.8% after the news of the deal. However, there are concerns about whether the deal will be completed. Nvidia and SoftBank, which owns Arm, set an 18-month deadline for the closing process. This deadline may be too long, especially with a greater focus on geopolitics and the making of international agreements, the portal indicates. Nvidia has promised to leave Arm’s headquarters in Cambridge, UK, where the company was founded in 1990.
The company also promised to keep Arm neutral.
“Nvidia will maintain Arm’s open license model and customer neutrality, serving customers in any industry around the world,” said CEO Jensen Huang.
The CEO, who founded Nvidia in 1993, is one of the most innovative leaders in technology. If Huang succeeds, he will position Nvidia as one of the most powerful chip companies in the world. Arm would help Nvidia build chips for artificial intelligence, the next-generation computing.
“Machine learning chips are half the world market, and the appetite for computing power is basically unlimited,” Domingos said. “With Arm up its sleeve, Nvidia is in a better position than anyone else in the world,” he stressed.