> Neumann created a company that destroyed value at a blistering pace and nonetheless extracted a billion dollars for himself. He lit $10 billion of SoftBank’s money on fire and then went back to them and demanded a 10% commission. What an absolute legend.
Is the global industry (cloud, PC, peripheral, mobile, embedded, IoT, wearable, automotive, robotics, broadband, camera/VR/TV, energy, medical, aerospace and military) loss of Arm independence our only societal solution to a failed experiment in real-estate financial engineering?
Why would Arm be valued at $10B publicly and $32B+ privately? Nvidia shareholders would be paying a premium for ... what exactly? Did Softbank overpay for Arm?
Is Arm not profitable as a standalone business? They recently raised some license fees by 4X.
I don’t believe NVidia will pay $30B. But certainly they might believe ARM has value outside its current cash flow and mediocre growth. Like strategically combining technologies.
I’m skeptical that will work, but Son was dumb enough to pay $31B with no strategic value.
> Nvidia shareholders would be paying a premium for ... what exactly?
They'd be paying a premium for a path to an all-nvidia datacenter & supercomputer.
Consider HPC applications like Oak Ridge's Frontier supercomputer. They went with an all AMD approach in part due to AMD's CPUs & GPUs being able to talk directly over the high-speed Infinity Fabric bus. Nvidia's HPC GPUs can't really compete with that, since neither Intel nor AMD are exactly in a hurry to help integrate Nvidia GPUs into their CPUs.
This makes ARM potentially uniquely valuable to Nvidia - they can then do custom server CPUs to get that tight CPU & GPU integration for HPC applications.
A $30B acquihire would be impressive, 100 times more than Amazon paid for Annapurna, the team who built AWS Graviton server CPU on top of Arm's reference design. If the HR department is having so much trouble hiring Arm engineers that Nvidia needs to pay 30 billion dollars to hire a CPU design team, something's wrong. Nvidia already has CPU design teams, e.g. they made a 2014 Transmeta-like design.
> .. this chip is fascinating. NVIDIA has taken the parts of Transmeta's initial approach that made sense and adopted them for the modern market and the ARM ecosystem -- while pairing them with the excellent GPU performance of Tegra K1's Kepler-based solution.
> there’s an interesting theory ... that Denver is actually a reincarnation of Nvidia’s plans to build an x86 CPU, which was ongoing in the mid-2000s but never made it to market. To get around x86 licensing issues, Nvidia’s chip would essentially use a software abstraction layer to catch incoming x86 machine code (from the operating system and your apps) and convert/morph it into instructions that can be understood by the underlying hardware.
Which other Arm licensee has been talking about x86/Arm instruction morphing in 2020?
If the goal of acqui-billion-hiring the Arm reference design team is to prevent other companies from using those designs, that would endanger smaller vendors in the Arm supply chain, along with many of the devices that run modern society. Regulators may not like that.
An ARM owned and fully controlled by NVIDIA is probably worth more to them than an independent and reasonably neutral ARM who's willing to do business with NVIDIA's competitors. Maybe not $22B more, though.
Doing IPO would mean they will use the money raised meaningfully. Shareholders probably see more upside with Nvidia integration. I’m not really sure what ARM need a bunch of money for in an IPO, they are pretty established.
The goal of independence is typically to execute on a vision.
According to some comments in this thread, the alternative is the slow destruction of the neutral Arm ecosystem. While some new baseline could be established in a few years, many Arm customers could face a material disruption in their supply chain.
With the US Fed supporting public markets, including corporate bond purchases of companies that include automakers with a supply chain dependent on Arm, there is no shortage of entities who have a vested interest in Arm's success.
If existing Arm management can't write a compelling S1 in the era of IoT, satellites, robots, edge compute, power-efficient clouds, self-driving cars and Arm-powered Apple computers, watches, and glasses, there will be no shortage of applicants.
ARM was publicly traded between 1998 and 2016. In that period its value multiplied about 25x, not counting the premium of the acquisition. Could you elaborate, please? Where do you see the disaster? (Honest question).
Apple is a small, although significant, part of ARM's total market share. And that 25x is, as I said, without taking into account the premium. If you do, and there are good arguments to do so, the valuation growth is 35x, in almost 20 years.
Regarding innovation, ARM's been at it since 1990. I'm sure it's not the same now as it was 30 years ago, but we're well past the point where one can reasonably fear it to be an unsustainable business. Last time I heard numbers, they were talking about more than 50 billion devices shipped with ARM IP in them. That is a massive market.
You don't answer my question. Why wouldn't licensing businesses work as publicly traded companies? What's the fundamental difference, specially in an increasingly fabless market, between a company licensing IP to other companies and a company selling productized IP to consumers?
Would Arm stakeholders (i.e. much of the computer industry) prefer an IPO?
In 2017, Softbank's Vision Fund owned 25% of Arm and 4.9% of Nvidia, i.e. these are not historically neutral parties, https://techcrunch.com/2017/08/07/softbank-nvidia-vision-fun...
After WeWork imploded, https://www.bloomberg.com/opinion/articles/2019-10-23/how-do...
> Neumann created a company that destroyed value at a blistering pace and nonetheless extracted a billion dollars for himself. He lit $10 billion of SoftBank’s money on fire and then went back to them and demanded a 10% commission. What an absolute legend.
Is the global industry (cloud, PC, peripheral, mobile, embedded, IoT, wearable, automotive, robotics, broadband, camera/VR/TV, energy, medical, aerospace and military) loss of Arm independence our only societal solution to a failed experiment in real-estate financial engineering?