Everyone in seems to be focusing on a few of the obvious reasons why this deal will or will not succeed, depending on their particular point of view. Some say it won’t be worth the money, that is pretty much a given. Others say that partners will all run for the hills because they don’t think highly of Nvidia and its management. Given that Nvidia has already threatened or sued every large ARM partner with patent troll level lawsuits in the recent past, this isn’t an idle concern.
To counter this, Nvidia has made many promises about keeping ARM independent, keeping jobs in the UK, US, and so on and so forth. With the current cash based flexibility of both major governments, those promises are likely not worth the paper they are printed on at the moment, but that is just our opinion. In any case these concerns will be addressed but how ironclad the result will be is the real issue at hand.
With all these concerns and more, there is only one real problem that Nvidia can’t address about the ARM deal, the company purchasing it. The purchase itself will be the death knell for ARM’s licenses and there is no mitigation, no placating the affected, and no chance it will result in a positive outcome. It is a bad outcome for a good company, and the really incredible ecosystem they built over the last few decades.
Note: The following is analysis for professional level subscribers only.
Disclosures: Charlie Demerjian and Stone Arch Networking Services, Inc. have no consulting relationships, investment relationships, or hold any investment positions with any of the companies mentioned in this report.
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