NVIDIA and ARM Merger: Does It Harm Samsung? [Im Juhyung's Tech Talk]

US Nvidia Acquires UK Semiconductor Company ARM for 47 Trillion Won
ARM Designs Used in Over 90% of Global Smartphone Chips
Concerns Over 'Chip Neutrality' in Semiconductor Industry
Global Companies Like Samsung and Huawei May Develop Competitors

American semiconductor company Nvidia announced on the 13th (local time) that it plans to acquire UK fabless company ARM Holdings. / Photo by Nvidia Official Website Capture

[Asia Economy Reporter Lim Ju-hyung] On the 13th (local time), Nvidia, a U.S. company specializing in graphics processing units (GPU) and artificial intelligence (AI), announced that it would acquire the British semiconductor design company ARM Holdings from Japan's SoftBank for $40 billion (approximately 46 trillion KRW). According to the British financial media outlet Financial Times, this amount represents the largest merger and acquisition (M&A) deal of the year and is the biggest ever for a semiconductor company acquisition.

However, some experts have expressed concerns about the "largest-ever deal" between Nvidia and ARM. They point out that the merger could undermine the "chip neutrality" that has supported the global semiconductor industry so far.

To understand chip neutrality, one must first know about the unique business model of ARM Holdings, which Nvidia is acquiring. ARM is a so-called "fabless" semiconductor design company. In other words, it does not manufacture and sell products directly but licenses its designs to other companies for a fee.

Today, global IT giants such as Samsung Electronics, Apple, Qualcomm, and Huawei all use ARM's designs.

The world's number one supercomputer based on an ARM architecture central processing unit (CPU) core, Japan's "Fugaku" / Photo by Yonhap News

In particular, ARM's intellectual property (IP), the "ARM architecture," is applied to about 90% of the world's smartphone chipsets. Moreover, ARM has expanded into markets such as the Internet of Things (IoT), AI semiconductors, and server semiconductors. Even the CPU of Japan's "Fugaku," currently the world's number one supercomputer, is based on ARM.

With such a vast market and customer base, ARM has maintained its unique "neutrality," enjoying the status of an international standard in semiconductor design. That is, regardless of the customer, ARM has never interfered or given preferential treatment but has fairly allowed access to and use of its designs.

For this reason, when SoftBank Chairman Masayoshi Son acquired ARM in 2016, he stated, "No semiconductor company should ever acquire ARM." This is because if one of the competing semiconductor companies acquires ARM, there is a significant risk of damaging ARM's neutrality.

Meanwhile, Nvidia decided to acquire ARM this year. If Nvidia raises the licensing fees for ARM's design assets or blocks access to certain companies, existing semiconductor companies such as Samsung and Qualcomm, which have relied on ARM's design technology, could suffer significant damage.

Jensen Huang, Chairman of NVIDIA / Photo by Yonhap News

Jensen Huang, Chairman of Nvidia, stated in an interview with the British media outlet The Telegraph on the 14th that he would guarantee ARM's neutrality.

He also explained plans to build the world's largest AI supercomputer using ARM chips in Cambridge, UK, where ARM's headquarters are located, and to make ARM and Cambridge the "global center for AI research." Huang said, "The UK government will be pleased when they hear our vision."

However, even if Nvidia guarantees ARM's neutrality, global IT companies are expected to remain vigilant as a powerful competitor emerges. If Nvidia's leading GPU and AI semiconductor technology merges with ARM's vast design assets, a "superior" semiconductor company covering everything from supercomputers to IoT could be born.

Furthermore, the issue of ARM's neutrality could lead to conflicts not only between companies but also between countries. Nvidia and ARM are headquartered in the United States and the United Kingdom, respectively, and their IPs belong to these two countries.

During last year's US-China trade dispute, former US President Donald Trump banned US and UK IT companies, including ARM, from doing business with China's Huawei. If Nvidia, merged with ARM, is used as a tool in future international trade disputes, it could cause significant turmoil in the semiconductor industry.

US-China Trade Dispute / Photo by Yonhap News

So how should domestic and international semiconductor companies like Samsung respond to these neutrality issues? Fortunately, there is an alternative design asset to the ARM architecture. It is the "RISC-V" architecture developed by the fabless company SiFive, established in 2015.

RISC-V plays a role broadly similar to the ARM architecture but has a crucial difference. While the ARM architecture is a paid design owned by ARM, RISC-V is open source, allowing anyone to design CPU cores for free.

However, compared to the ARM architecture, RISC-V is widely regarded as significantly lacking in performance, development ecosystem, and all other aspects. To make RISC-V a true competitor to ARM, active investment and research and development from other semiconductor companies such as Samsung, Qualcomm, and Huawei will likely be necessary.

This content was produced with the assistance of AI translation services.