Newcomers in full swing: Billion deal in the chip industry: What NVIDIA is planning with the Chinese ARM | message

by Stephan Bauer, Euro am Sonntag

S.Effective marketing is part of every billion dollar business. “The deal creates a company that is fabulously positioned for the age of artificial intelligence,” says NVIDIA boss Jensen Huang, who also praises himself with the mega takeover in the chip industry that has just been decided 40 billion dollars in own shares, cash and possible future payments in the British chip designer ARM Holdings, which the Californians are acquiring from Japan’s technology holding Softbank.

“Artificial intelligence is the most powerful technological force of our age,” says Huang, who founded Nvidia in 1993 and is responsible for the strategic direction. In their core business with graphics processors, the Americans serve a growing community of over 200 million gamers worldwide. Nvidia has just introduced the latest generation of high-performance graphics cards for computers, it will be launched this month and, according to analysts at JP Morgan, is way ahead of the competition. The US bank expects a strong sales surge in both the second half of 2020 and 2021.

Chips for smart machines

The special development potential and the company’s rise past top dog Intel to become the world’s number 1 in the semiconductor industry has a different background: high-performance graphics processors are not only suitable for gaming, but also provide high computing power in conjunction with software for artificial intelligence.

The breadth of applications in the field of Artificial Intelligence (AI) creates new customer groups for the Californians. As a specialist in autonomous driving, NVIDIA has built an excellent reputation over the years. Daimler, for example, is working with NVIDIA to build an AI platform that will form the heart of Mercedes-Benz’s driver assistants.

With ARM, Huang cleverly expands the scope. The Cambridge company’s chip designs are known for their energy efficiency in mobile computing. It is not for nothing that they are found in almost all smartphone processors, including those from Samsung and Apple, which now prefer to build their own chips with ARM design rather than buy Intel’s components.

Efficient and mobile, ARM’s technology is a perfect fit for a huge growth market: the Internet of Things, in which intelligent machines communicate, production and logistics processes run digitally and cars will also be able to drive automatically in the future. “In the years to come, billions of AI computers will create a new Internet that is a thousand times larger than today’s network,” says Huang. NVIDIA chips are supposed to fuel this network of smart machines.

If the deal succeeds, it will be the largest in the industry to date. But the regulatory hurdles are high. China, now the world’s largest semiconductor market, could object to the fact that the ARM chip designs, which are important for many Chinese technology companies, will in future be in the hands of a US company and no longer an Asian tech holding company. NVIDIA recently had to wait a long time for Beijing to approve a small semiconductor purchase. The Chinese will look very carefully at the ARM deal. Huang is giving himself one and a half years until the closing. He knows exactly why.

Hot thing: Huge growth potential, expensive stock: the Deal was nevertheless acknowledged with a further price increase. Risky.

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