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Current Affairs

Nvidia’s acquisition of Arm Ltd

Date: 10 February 2021 Tags: Miscellaneous


American chipmaker Nvidia’s $40 billion acquisition of Arm Ltd from SoftBank Group has come under a cloud.



This is in addition to the US Federal Trade Commission announcing last year that it will be seeking additional information about the deal to ensure it didn’t breach competition rules.



  • In September, Nvidia had announced that it will purchase Arm from SoftBank for $40 billion. This became the largest-ever deal in the semiconductor industry. 

  • Even though China is still looking to develop its presence in the semiconductor industry, the deal saw protests from other countries like South Korea and Taiwan.

  • Mergers and acquisitions in the semiconductor industry more than doubled last year to $144 billion, marking a consolidation drive of the sector.


Opposition to deal

  • Rivals of the two companies fear potential locking out of smaller players if Nvidia decides to put brakes on Arm’s open-licensing business model.

  • As a supplier of chip designs and intellectual property to most players in the semiconductor industry, Arm has managed an unparalleled reach with large customers like Intel, Samsung, Apple, Qualcomm, etc.

  • If Nvidia can merge the Arm and Nvidia designs in the same software then that locks out companies from entering the seller market.

  • In addition to the impact that Nvidia’s acquisition of Arm could have on its rivals, the regulators are also looking at the impact of a deal this size on the strategic interests of their respective jurisdictions.

  • The UK has also noted earlier that it plans to put greater scrutiny on strategic deals in the technology sector, irrespective of the size of a deal.  


Global semiconductor industry

  • The worldwide semiconductor revenues in 2020 stood at $449.8 billion, an increase of 7.3% from 2019.

  • Intel retained its position as the top global semiconductor vendor by revenue in 2020, followed by South Korean firms Samsung Electronics and SK hynix at number 2 and number 3.