Nvidia reportedly to acquire ARM Holdings from SoftBank for $40B
arstechnica.com
arstechnica.com
"acquisitions diminish value of thing being acquired" may generally be true but "acquisitions can be a way to stave off a threat" i believe may also be true, though to your larger point this may lead to less value in the market overall.
The company is valued at $300 billion currently. The ARM deal will apparently be paid mostly in stock, making Softbank NVidia's largest shareholder. If they succeed in creating the perception among investors that NVidia controls the ARM market, the share price increase would dwarf a $15B loss in the value of the ARM unit itself.
The US will gladly accept it, since this is a massive plus for national security. This deal would mean a US entity owns pretty much every important chip architecture.
It’s already a huge strategic loss for the EU & UK that ARM doesn’t have European owners.
Also there is absolutely no way for the EU to take any action now with Brexit.
This isn't about Brexit being a distraction, it's about their mandate and optics.
Until the 31st of December the DG COMP actually needs not only to show that there is a sufficient reason to investigate the deal, but that the CMA ruling wasn't in line with the TFEU.
Big single markets like EU or US can take action against any merger between two international companies even if neither of them is based on the EU.
I don't think there is any reason for EU to take action in this case.
There is nothing EU can or should do here, no matter how you feel about the move.
The US is the world's biggest single market, by a considerable margin over the EU now. It was larger than the EU before Brexit, now it's that much bigger.
US GDP for 2019 was around $21.5 trillion.
EU GDP for 2019 minus the UK is $16 trillion ($18.7 trillion with the UK).
That giant $5.5 trillion gap is big enough to fit the world's #3 economy (Japan) into. It's larger than France + Italy ($4.7t), or Germany + Spain ($5.2t).
Given the major economies of the EU haven't seen any net economic growth since 2006-2007, it's unlikely the EU will match up to the US economically in the coming decades. Over the coming 10-20 years it will persistently fall away, an increasing distant third behind the two superpowers of the US and China. And that's the good scenario and assuming there are no more exits from the EU. The US will become more aggressive about its trade imbalance with the EU, with the EU heavily dependent on exports and in a position of weakness with the US accordingly; and China will seek to compete with and replace the high value manufacturing they import from the EU (with most of the focus in both cases on Germany, their future is stagnation if they don't figure out how to move to a modern tech economy and fast). Germany will go through a very painful deindustrialization that they've largely been able to avoid thus far, as China goes after their high-end manufacturing and then exports those competing goods to the rest of the world far cheaper than Germany can.
France GDP: 2008, $2.9 trillion | 2019, $2.7 trillion
Germany GDP: 2008, $3.8 trillion | 2019, $3.8 trillion
Italy GDP: 2008, $2.4 trillion | 2019, $2 trillion
Spain GDP: 2008, $1.6 trillion | 2019, $1.4 trillion
Netherlands GDP: 2008, $948 billion | 2019, $902 billion
And that's of course pre-pandemic. Those are the five largest economies of the EU, accounting for 73% of the EU economy. They're going to see a likely net zero (or negative) economic growth for 20 years or more (inflation adjusted it's going to be brutal).
Given that the US is reindustrialising [https://doc-research.org/2018/06/reindustrialisation-us-degl...] right now, it's extremely unlikely we'll see a decline in German manufacturing - even if that means an increase in european protectionism. There's no way Germany (who hold vastly outsized power within the European Commission, especially in a post Brexit world) would willingly allow that strategic and economic advantage to wilt. Especially given the economic decline and social disintegration that the move to a service economy wrought on France and the UK. Chinese economic might is almost entirely based on exports, in an era of increasing protectionism and at a time when their manufacturing base is moving to places like Vietnam and to a lesser extent India. The US's failure to invest in infrastructure (everything from broadband to roads to dams) has left it in need of massive capital investment. And of course massive internal investment (arguably unsustainable and fraudulent) in construction. I'm not suggesting these are paper tigers, but neither are assured of 'superpower' status.
Moreover - the enormous material costs we're starting to see from climate change will accelerate. We can estimate some impacts, such as enormously larger migrant crises and water wars. But the second order effects of this are extremely unpredictable.
The DG COMP investigations are usually triggered via complaints raised by member states however they can also decide to investigate it own their own, once they done if any action needs to be taken they would authorize the regulators in each member state to take that action they do not enforce actions themselves.
However there still needs to be a violation of either Article 101 or 102 for them to investigate, this is quite different from the Chinese case where NXP and Qualcomm had to seek permission from the Antitrust regulator, in this case if NVIDIA requires one it would only be from the UK regulator and there is currently no freaking way that Brussels would interject in the midst of Brexit.
A year, 5, 10 down the line they might decide to open an antitrust case if they believe that NVIDIA's practices warrant an investigation, but currently there is no way for them to block the sale.
Nvidia/Arm merge is large enough to require the commission be notified prior to its implementation. The time between notification, clearing or final decision is just few months.
https://ec.europa.eu/competition/mergers/procedures_en.html
Merger cases by date - Last 3 months https://ec.europa.eu/competition/elojade/isef/index.cfm?fuse...
NVIDIA was bullied by both AMD and Intel when it wanted to make GPUs that are capable running x86 code.
IBM would pretty much kill ARM at least SoftBank left it be.
NVIDIA on the other hand will come with a strong vision and competency this is by far the most exciting shift in the semi market for years and we might finally get some competition in the CPU space.
You are talking about Desktop / Server CPUs I presume. The problem is that this is detrimental to the competition in the mobile / phone CPU space as Nvidia is a direct (although not very big) competitor to Qualcomm, MediaTek, Samsung, HiSilicon etc., but would now own the architecture everyone is using.
NVIDIA isn't a direct competitor to any of those, they had a single product Tegra that can even be considered a competition.
IBM knows how to license an ISA and has heard of open source. NVIDIA hates open source almost as much as Oracle. I'm pretty sure its not going to go well if NVIDIA gets ARM.
PEs do the buy complete company, often through an LBO, "restructure", flip for a profit.
"The announcement of the deal hinged on SoftBank ending a messy dispute between Arm and the head of its China joint venture, Allen Wu, who earlier rebuffed an attempt to remove him and claimed legal control of the unit.
Several people close to SoftBank said the matter was now “resolved,” though one person close to Mr Wu said he “remains the chairman of Arm China.” A spokesperson for Mr Wu declined to comment."
Yahoo shareholders got shafted when Alibaba spun out their multi-billion dollar payments division, AliPay, "without informing other shareholders ... because the CCP made us." lol.
https://www.ft.com/content/40a66dd2-b9ec-11e0-8171-00144feab...
https://innovator.news/how-an-alibaba-spin-off-became-a-150-...