Intel Corporation (NASDAQ:INTC) has maintained a strong lead in the processor industry but it might not retain that lead for long because Nvidia is upping the ante.
NVidia recently revealed that it secured a deal to acquire UK-based chip maker ARM from its current owner, Softbank. Recent reports suggest that the two agreed to a deal worth $40 billion which is roughly 27 times the annual revenue that ARM generates. ARM makes SoCs that are sold globally but mainly for the midrange market. However, the new purchase and especially the huge cost raises questions as to what Nvidia is planning.
NVidia’s acquisition of ARM is part of its plan to take on Intel
Intel has been the leading SoC provider especially the PC industry while NVidia has dominated the GPU segment, managing to ward off heavy competition from rivals such as AMD. NVidia’s acquisition of ARM will allow it to have a chip division through which it can develop a more appealing suite of offerings to the PC industry. The GPU manufacturer is likely planning to use this approach to solidify its presence in the PC segment where it can provide powerful processors and GPUs at affordable prices.
If effective, this approach will undercut Intel’s leadership in the PC segment. ARM already has the technical knowhow to make the processors and Nvidia has enough capital to boost the research and development activities towards building more powerful SoCs. This approach will not just allow NVidia to compete with Intel, but it will also have a stronger arsenal to compete with AMD. The latter already has a lineup of powerful Ryzen processors that compete with Intel processors.
NVidia’s entry into the processor segment has been long overdue but it is also happening at an ideal time when the world is exploring more mobility. ARM's architecture is ideal for making highly efficient mobile chips. NVidia is thus positioning itself to take the lead when it comes to providing chips and GPUs that will facilitate the existence of mobile-friendly PCs.