News Nvidia Announces ARM Acquisition for $40 Billion

Page 2 - Seeking answers? Join the Tom's Hardware community: where nearly two million members share solutions and discuss the latest tech.
Uh, how exactly can one "be nice" in a cut-throat business? Microsoft was losing its shirt on the original, mainly due to the inclusion of a hard drive. It wanted its suppliers to cut their margins. Why should Nvidia or Intel go along? Just to be charitable to a company sitting on a mountain of cash?

It went deeper than just pricing.

And NVIDIA and Intel just wanted to increase their profits because MS was locked in to their eco system. Microsoft knew full well their yields and mfg cost were improving.

Going forward, there were ongoing agreements to prevent that from happening again. While the margins were slim for AMD, they were willing to play ball to get a steady income stream and MS/Sony to pay for R&D on new architectures.
 
  • Like
Reactions: bit_user

Shadowclash10

Prominent
May 3, 2020
184
46
610
Please correct me and bear with me if I'm wrong: I was under the impression that Nvidia and Softbank have already entered the agreement - sure, Nvidia hasn't paid them yet - but they've already like signed the papers and everything? So then why is everyone saying that this will be stopped and things like that?
 

Shadowclash10

Prominent
May 3, 2020
184
46
610
Uh, how exactly can one "be nice" in a cut-throat business? Microsoft was losing its shirt on the original, mainly due to the inclusion of a hard drive. It wanted its suppliers to cut their margins. Why should Nvidia or Intel go along? Just to be charitable to a company sitting on a mountain of cash?
Yeah. IMHO there's a difference between cut-throat and cut-throat, if you catch my drift. Basically all companies follow cut-throat practices, such as not cutting margins, if you call that cut-throat. The latter is what I consider shady, anti-consumer, etc.
 

Chung Leong

Reputable
Dec 6, 2019
493
193
4,860
I am really surprised that Apple did not buy ARM, given they are abandoning x86 ..

It was obvious from the start that Nvidia is the only suitor. The only companies with both the means and motivation to acquire ARM were Intel, Qualcomm, Samsung, Huawei, and TSMC. All of them would get turn down by regulators for one reason or another.
 

Chung Leong

Reputable
Dec 6, 2019
493
193
4,860
Please correct me and bear with me if I'm wrong: I was under the impression that Nvidia and Softbank have already entered the agreement - sure, Nvidia hasn't paid them yet - but they've already like signed the papers and everything? So then why is everyone saying that this will be stopped and things like that?

The deal is subjected to approval by anti-trust authorities. If it fails then Nvidia will owe ARM a couple billions in break-up fee. It probably won't fail since politicians aren't that pricey 😜
 
Certainly Nvidia isn't planning on taking 40 / 1.5 ~= 27 years to recover its investment. I think Nvidia plans to take the ARM license and turn it into a multi-billion dollar revenue stream to compete with Intel and AMD. Some of that will be servers, some of it will be consumer PC chips maybe, and a bunch of it will also be smartphone licensing. That's my guess anyway.
I think NVIDIA would want to push ARM heavily into the datacenter/HPC market since they have a lot of foothold there.

But the licensing thing is certainly something any company would've wanted considering how prevalent ARM is. All I can say though is "at least it wasn't Rambus or [Insert patent troll here]"
 

hannibal

Distinguished
I am really surprised that Apple did not buy ARM, given they are abandoning x86 ..

Apple did a huge mistake here , the same mistake Intel did when they let AMD to buy ATI.

More over , Google not buying ARM ?? had they bought it , Google would have controlled both the software and the hardware of the whole mobile industry.

apple most likely don`t want to even pretend to sell their arm chips to anyone else... so They were not interested in... but this can now cause Apple some serious problems, if nvdia wants to milk Apple for using arm lisenses technologies...
 
And it costed Microsoft less than 50 cents to produce a copy of Halo. Did any of that profit end up in the pocket of Intel or Nvidia when that game proved popular?

It was more a matter of staying competitive against PS2 which was coming down in price. It was in fact their best interest to cut them a break.

Microsoft was the customer. NVIDIA/INTEL were never a customer of MS. Yes NVIDIA and Intel have the right to set prices. MS also has the right to seek someone else, and they did. The irony is if they were a little more flexible, they could have had AMD out of their hair by now. That's what greed gets ya.

The fact so many companies (big and small) have been soured by their relationship with NVIDIA just goes to show they aren't a nice company to work with.
 
Last edited:
If nVidia makes it hard for AIB partners to profit, they'll all jump ship to AMD and start loading their cards with ATi GPUs. Thus nVidia will have painted itself into a corner and will become nothing more than a boutique tech company because suddenly all the innovation from the AIB partners will be gone. No more EVGA, no more MSi, no more Zotac, etc.

NVIDIA makes probably about a 40% margin on chipset sales (They sell the RAM with the GPU as a set)
The card vendor may make another 10->25% or so depending on scarcity and model rank (higher end models make more margin) That's 10->25% nvidia isn't making.

There's zero reason why they couldn't pick one supplier and say "We'll give you 100% of all mfg, if you give us a steep discount to make OEM cards for us with our branding." To the big mfg (like Sapphire, or EVGA, Foxconn, etc...) that's a workable deal because while they make less per unit, they capture a majority of the market, and NVIDIA bears the risk of selling them, thus netting a higher net profit, while also handicapping their competition. At one time NVIDIA owned all their own assembly plants. But competition was tight and they were forced to divest themselves of that. There is no competition any more really. (Except AMD)

This puts more margin in NVIDIA's pockets while putting smaller card vendors like Zotac, ASRock, etc out of the GPU business.
 
  • Like
Reactions: Avro Arrow

spongiemaster

Admirable
Dec 12, 2019
2,273
1,277
7,560
There's zero reason why they couldn't pick one supplier and say "We'll give you 100% of all mfg, if you give us a steep discount to make OEM cards for us with our branding."

There is at least one reason. Nvidia bought the remnants of the last company that tried that out of bankruptcy proceedings, 3dfx. Huang certainly hasn't forgotten that, and he is extremely unlikely to make the same mistake.
 
NVIDIA makes probably about a 40% margin on chipset sales (They sell the RAM with the GPU as a set)
The card vendor may make another 10->25% or so depending on scarcity and model rank (higher end models make more margin) That's 10->25% nvidia isn't making.

There's zero reason why they couldn't pick one supplier and say "We'll give you 100% of all mfg, if you give us a steep discount to make OEM cards for us with our branding." To the big mfg (like Sapphire, or EVGA, Foxconn, etc...) that's a workable deal because while they make less per unit, they capture a majority of the market, and NVIDIA bears the risk of selling them, thus netting a higher net profit, while also handicapping their competition. At one time NVIDIA owned all their own assembly plants. But competition was tight and they were forced to divest themselves of that. There is no competition any more really. (Except AMD)

This puts more margin in NVIDIA's pockets while putting smaller card vendors like Zotac, ASRock, etc out of the GPU business.
Yeah, ATi used to make their own cards as well. IIRC, they stopped doing that when they struck a deal with Diamond Multimedia to buy their pro-level FirePro line. Part of that deal involved Diamond selling ATi Radeon GPUs under their own name. I think that made them the first video card AIB partner because not long before that, they were producing Diamond FirePro, Diamond Stealth and Diamond SpeedStar video cards of their own design.

You're right that nVidia COULD give all their business to one AIB partner but it would be detrimental to them. Suddenly this partner will have no competition and that is detrimental to innovation. Let's go with the obvious choice, EVGA. Suddenly, you'll have names like Palit/Gainward/GALAX/KFA2, Sparkle, ECS/Elitegroup and PNY joining names like XFX, Sapphire, Club3D, HIS, BioStar, Diamond and VisionTek on the Radeon side. They'll compete with each other like mad which will drive prices down and board innovation up. Zotac will cease to exist because they're just Sapphire under a different name. Add in the former dual-wielders like ASUS, Gigabyte, MSi and ASRock. Suddenly you've got A LOT of competition for the smaller Radeon market. This will cause the Radeon market to swell because prices will be far lower than they already are because of the number of companies trying to compete in the Radeon space.

If nVidia decides at some point that they've become tired of EVGA, none of the other board partners will want to deal with nVidia again after seeing how well they get treated by ATi in comparison. This is why ATi never had a major AIB partner jump to nVidia even if they don't sell as well. It's also why nVidia lost a MAJOR AIB partner to ATi in the form of XFX. I remember having an XFX GeForce card back in the day and then an XFX Radeon HD 4870 1GB (which became TWO 4870s). I didn't know why XFX would do this because they were either tied with or just slightly behind EVGA in the nVidia board hierarchy, making GeForce cards and nForce motherboards. They became disillusioned with nVidia and started making ATi cards as well, starting with the HD 4xxx series. Then nVidia threw a hissy fit and refused to sent them Fermi cards. XFX shrugged, went all-in with ATi and has been quite happily making only Radeon cards ever since. Here I still remember the XFX GTX 280 Black Edition (those were a big deal back in the day).

No matter who nVidia deals with, they end up pissing them off (they even pissed off EVGA with the Founder's Edition cards). No matter who they choose, sooner or later, they'll be at odds with them just from nVidia being nVidia. LOL
 
Last edited:

Chung Leong

Reputable
Dec 6, 2019
493
193
4,860
Microsoft
It was more a matter of staying competitive against PS2 which was coming down in price. It was in fact their best interest to cut them a break.

Your comment reminds me of the hammer scene in Misery. "It's for the best," she said. What the hell did Intel and Nvidia know about their own interest?
 
Funnily enough NVIDIA decided around the time the PS4 and XBOne were in the planning stages to not bother with the console market. And I'd argue AMD was in the best position to supply something to Sony and Microsoft.

So far Nintendo and NVIDIA seem to be happy, but then again Nintendo is just buying whole SoCs.
 

castl3bravo

Distinguished
Aug 14, 2013
44
3
18,535
Whelp it's time for a few smart people to work on putting some "open source" CPU intellectual property together. I wouldn't hold my breath with Jensen using the same business model as ARM has to license it's IP. I see this much like what Larry Ellison did with Java after Oracle bought Sun Microsystems. If you want to license something from Nvidia the first question out of Jensen's mouth will be "What's in it for me?" Depending on your answer you'll either get a sweet heart deal or the deal will just fall apart due to cost.
 

castl3bravo

Distinguished
Aug 14, 2013
44
3
18,535
Given the number of companies using ARM tech, you'd think ARM would have earned far more money. Even a few dollars per smartphone chip would have been a big chunk of money. That's probably where Nvidia will take things. It hurts the (crappy!) $15 chips more, but the stuff like Apple's A13 and such can easily absorb several dollars of additional cost to the new license owner.

As a consumer I don't want to spend more money on a phone with an Nvidia tax. In other words how much will a cellphone cost with ARM's IP, like the Snapdragon CPU, after Nvidia starts renegotiating deals with Qualcomm?
 
  • Like
Reactions: bit_user
As a consumer I don't want to spend more money on a phone with an Nvidia tax. In other words how much will a cellphone cost with ARM's IP, like the Snapdragon CPU, after Nvidia starts renegotiating deals with Qualcomm?
I'm not trying saying higher prices are what I want either. I'm just saying it's surprising to me that ARM wasn't making more money, and I'm sure Nvidia plans to 'fix' that by charging more. Of course, a lot of the most popular phones already cost a ton of money, relatively speaking. The latest Apple or Samsung costs as much as a decent laptop, and people plan on upgrading every other year. Madness!
 
Three years is nothing , you need that time to research something new.
Yeah but the only reason they got a cash injection after three years was because intel gave them 1.25bil in 2009-2010 due to the settlement, which AMD managed to disappear within two years.
As I said,AMD still hasn't recovered from this terribad move they made of buying ati.
It's only since ZEN that they are starting to very slowly make very little money.
 

Chung Leong

Reputable
Dec 6, 2019
493
193
4,860
I'm not trying saying higher prices are what I want either. I'm just saying it's surprising to me that ARM wasn't making more money, and I'm sure Nvidia plans to 'fix' that by charging more.

Increasing license fees doesn't deliver sustainable growth. No executive wants to see a boost in one quarter and then a sharp drop off in the next. As Microsoft has shown, a better strategy is to use dominance in one market to leverage into other markets. Nvidia is not going to jack up prices of ARM licenses. What they'll do is make it more difficult to pair an ARM CPU with a non-Nvidia GPU.
 
Increasing license fees doesn't deliver sustainable growth. No executive wants to see a boost in one quarter and then a sharp drop off in the next. As Microsoft has shown, a better strategy is to use dominance in one market to leverage into other markets. Nvidia is not going to jack up prices of ARM licenses. What they'll do is make it more difficult to pair an ARM CPU with a non-Nvidia GPU.
Which ultimately leads down the same road: higher total price and higher profits for Nvidia. We'll see what happens, though. I mean, Nvidia is definitely going to make a seriously play for the supercomputer market with new ARM designs, I'm sure of that. And if it can get a bunch of big wins there? It may not need to worry so much about jacking up ARM license costs.