“I was one of the first people to make big bets in the UK after brexit and I will see the arm deal as the most important deal of my life.” Sun Zhengyi, chairman and President of Softbank group, told investors in 2017. But after four years of hard work, arm may change ownership again. Recently, as soon as the news of arm’s “selling itself” came out, it caused a great stir in the global chip market. The speculation about the buyer has never stopped. Apple, Samsung, TSMC, Qualcomm and NVIDIA have become potential trading partners. In this competition, NVIDIA seems to be winning. According to foreign media reports, NVIDIA will buy arm, a British semiconductor IP company, for 40 billion pounds (about US $52 billion). The two sides have entered the negotiation stage and are expected to complete the transaction by the end of this summer. However, for arm, whether NVIDIA is a white knight or a barbarian is still unknown. However, many insiders in the industry said in an interview with China Business Daily that the possibility of transaction is relatively large. Firstly, Softbank, the shareholder of arm, is facing serious financial problems; secondly, NVIDIA has relative strength among all potential purchasers, and is also in urgent need of NVIDIA’s current development speed. However, if the acquisition is successful, it will have a greater negative impact on domestic enterprises, especially for Huawei Hisilicon, which has been using ARM architecture and is strongly suppressed by the United States. < / P > < p > arm was born in the era of PC dominated by Intel x86 architecture, initially represented by acorn RISC Machine. The company was founded in 1978 and headquartered in Cambridge, UK. < p > < p > in 1990, acorn split up the arm company with 1.5 million pounds of intellectual property rights and 12 engineers. So at the beginning, there were only 12 people in arm. Because of the poor financial situation of the parent company, the office was just a warehouse. Although it experienced some twists and turns at the beginning of its establishment, arm (AD Advanced RISC Machine) architecture rapidly opened the market in the field of mobile chip by virtue of its low cost, low power consumption and high efficiency. < / P > < p > not only that, arm has given up the traditional IDM (integrated device manufacturing) mode, so that many manufacturers can continue to design and innovate in their instruction set. According to the different requirements and capabilities of chip design companies, arm provides three different external authorization modes. Arm benefits from IP licensing fees, including arm architecture and IP; royalty based on the price of each chip; and new software services. < / P > < p > in July 2016, Softbank Group acquired arm as a 100% holding subsidiary with a price of 24.3 billion pounds. < / P > < p > after the completion of the transaction, sun Zhengyi was full of enthusiasm for a time, and expressed on many occasions that arm will play a crucial role in the next wave of Internet of things technology. “Arm is the center of the information revolution, and its chips will appear in various places to redefine various industries.”. < / P > < p > however, after being acquired by Softbank, arm seems to have lost its magic power, with revenue of $1.831 billion, US $1.836 billion and US $1.898 billion respectively from 2017 to 2019. While investing a lot in R & D, arm’s net profit after 2017 is also declining. In 2015, arm’s profit was $843 million, and in 2019, arm’s net profit was only $276 million. In 2019, arm’s R & D investment is more than $700 million, accounting for about 40% of the total revenue. At the same time, Softbank itself is going from bad to worse. According to the financial report, its operating loss in 2019 was as high as 1.36 trillion yen (about 12.6 billion US dollars), a record low. The net loss attributable to shareholders of Softbank’s parent company was 961.576 billion yen (about 8.973 billion US dollars). At the same time, Softbank’s heavy investment projects also failed repeatedly, among which Uber’s share price fell one after another Valuations plummeted and IPOs failed, and dozens of companies even faced bankruptcy. < p > < p > until July this year, Softbank considered selling part or even all of arm’s shares, or reorganizing and listing arm. Sun Zhengyi said frankly: “selling arm will be the choice to help the company improve its financial situation.” < / P > < p > an industry person analyzed to the reporter that Softbank is actually an investment company. Arm in Softbank’s hands is equivalent to stock, which is only the difference between short-term holding and long-term holding. When the funds in hand are tight, it will naturally become a cash tool. In 1993, the company was founded by Mr. Huang Yingxun. Huang Renxun is the president and CEO. NVIDIA was listed on NASDAQ in 1999. In the same year, NVIDIA launched the first display core named geforce 256, and put forward the concept of GPU for the first time. After that, GPU became another important computing unit independent of CPU in computer. Subsequently, NVIDIA almost broke through the GPU field. At that time, Huang Renxun put forward his own “Huang’s law”, saying that NVIDIA’s core strategy was to upgrade its products every six months and double its functions. At that time, there was another more famous law in the industry, which was the “Moore’s law” created by Moore, the founder of Intel Corporation. The number of transistors on the chip doubled every 18 months, and the performance doubled. Compared with Moore’s law, the technology update speed of Huang’s law is 2 times faster. However, NVIDIA is changing from a graphics card manufacturer to an AI innovator. This can be seen in NVIDIA’s latest acquisition. < / P > < p > in April 2020, NVIDIA officially completed the acquisition of mellanox, with an amount of US $6.9 billion. Its biggest acquisition in history was designed to strengthen the data center business. Mellanox, founded in 1999, is a network hardware equipment supplier. It started with Infiniband technology and later expanded to Ethernet with RDMA technology. After the acquisition of mellanox, NVIDIA’s competitiveness in the data center has been further enhanced, which has been reflected in the financial report. On August 19, U.S. time, NVIDIA announced its second quarter report as of July 26, with revenue up 50% year-on-year to a record high of $3.87 billion, and adjusted net profit of $1.37 billion, up 79% year-on-year, both higher than market expectations. < / P > < p > it is worth noting that the data center business surpassed the game for the first time and became the largest business segment of NVIDIA. In the quarter, data center revenue grew 167% to $1.75 billion, higher than the game business, which grew 26% to $1.65 billion. NVIDIA’s GPU was originally designed for games, with computers as the main market and contributing most of its revenue. In recent years, GPU has become an indispensable infrastructure for the application of artificial intelligence (AI). In the second quarter earnings call, Huang Renxun said that NVIDIA’s future success does not lie in its ability to optimize performance at the chip level, but to promote the development of data center scale computing. < / P > < p > according to the industry insiders, arm’s CPU IP will perfectly make up for the missing part of NVIDIA’s data center business. Although NVIDIA GPU has strong computing power and is suitable for AI’s computing needs and deep learning, data center computing is not only AI, but also requires CPU to complete many other tasks. While the data center is based on Intel’s x86 CPU, NVIDIA certainly does not want the core technology to be in the hands of competitors. However, for the acquisition of arm, Huang Renxun said vaguely that NVIDIA has been a long-term partner of arm. Arm provides chip design for its autopilot, Nintendo game system chip and many other businesses and products. In addition, NVIDIA has made a significant investment in CUDA acceleration by enabling servers based on ARM architecture. As for whether it is negotiating with arm to acquire, there is no clear indication. < p > < p > statistics show that 90% of mobile devices, 90% of Internet of things devices, 75% of vehicle audio-visual entertainment system / advanced driving assistance system and 32% of network infrastructure in the world in 2019 are processors or controllers developed based on ARM architecture. In short, in 2019, 34% of the world’s processors use arm architecture. As of February 2020, the shipment of chips based on arm has reached 160 billion; from 2016 to 2019, the average annual shipment is 22 billion; in the field of smart phones, arm architecture gradually forms barriers, almost monopolizes the mobile chip market, accounting for more than 90%. Herman Hauser, the co-founder of arm, once expressed his opposition to NVIDIA’s acquisition of arm, saying: “after the acquisition, it will be a disaster for arm.” The important point of selling Hermann’s Softbank to any company is that it can keep its business model neutral. Most of the licensors of arm architecture are competitors of NVIDIA. If they are acquired by NVIDIA, they will naturally look for alternatives to arm. < / P > < p > industry insiders told reporters that the neutrality played a very important role in the wide application of arm architecture. It is a British enterprise, almost independent of the trade situation. Moreover, it only provides the architecture and does not make chips on its own. All partners can create their own business by using authorization, and there are almost no barriers for enterprises around the world. If NVIDIA’s acquisition is successful, the government in charge of arm will be the United States, which is applicable to the laws and policies of the United States. Considering the upgrading of restrictions on Huawei in the United States, the impact of the successful acquisition on Huawei and other domestic enterprises is immeasurable. < / P > < p > it is reported that 95% (more than 200) of China’s integrated systems (SOC) are based on ARM architecture, and the annual volume of related chips is about 10 billion. From 2006 to 2017, the market volume of Chinese partners has increased by 140 times. At present, arm has more than 40% of the IP market share and more than 90% of the IP market share of mobile phone chips. However, a U.S. stock analyst told reporters that in addition to having capital strength, how to obtain the approval of the local government and the anti-monopoly agencies of various countries is the most important thing for such transnational, large-scale and high-tech enterprise mergers and acquisitions. It is worth noting that article 2 of the general provisions of Chapter I of the anti monopoly law of the people’s Republic of China states that “this Law shall apply to monopoly behaviors in economic activities within the territory of the people’s Republic of China; this Law shall be applicable to monopoly behaviors outside the territory of the people’s Republic of China that have an exclusive or restrictive impact on domestic market competition.” < / P > < p > prior to that, in 2019, Qualcomm planned to acquire NXP for $44 billion. NXP is a Dutch company, formerly known as Philips semiconductor division. It is the world’s largest supplier of automotive chips, mobile payment chips and microcontrollers. However, the acquisition was not approved by the State Administration of market supervision and administration of China, and the anti-monopoly agency of EU also intervened in the investigation, which eventually aborted. < / P > < p > for the rumor about the acquisition of arm, the reporter contacted arm and NVIDIA respectively for an interview, but as of the time of press release, neither side had made a reply.