It could be Nvidia just wants ARM's profits and leave them alone, but I don't understand why Nvidia would spend 40 billion dollars on that. They spend 40 billion on the control of a company, why would they do that if they just would leave them be? Surely they want to exercise that control in some way for their own goals. Especially a company like Nvidia which (in my linked comment) has a proven track record of not understanding how to collaborate with others.

EDIT: Let's be clear that ARM's incentive last week was to create and empower as many competitors for Nvidia as possible. They were good at that and was the root of the success of the ARM ecosystem. That incentive is completely gone now.

I'm guessing Samsung has a track record where I'd feel a little more confidence in the situation if they'd taken over ARM here, but in general ARM's sale to Softbank and thereby its exposure to lesser competitive interests has been terrible. They could have remained a private company.

> They spend 40 billion on the control of a company, why would they do that if they just would leave them be?

Well, the optimistic reason would be talent-share. nVidia has a lot of chip designers, and ARM has a lot of chip designers, and having all of them under one organization where they can share discoveries, research and ideas could benefit all of nVidia's products.

All I can say to that is that I don't share your optimism. Explaining this as an acquihire sounds nice, but that seems a thin explanation of this purchase given the key role ARM has for many of Nvidia's competitors and the ludicrous amount of money Nvidia put on the table here. We'll see what the future holds - I certainly hope the open ecosystem can survive.

I don't see it as much as Nvidia trying to strangle the competition that licenses ARM as much as I see it Nvidia having full control over the development of the architecture. This would enable them to own full solutions in their AI part of the business and tailor the architecture to their very specific needs.

Buying ARM not only allows them to control the direction of development, it also protects them should anyone else have bought it with hostile intent.

Personally I see this as more of an attack on Intel.

I agree actually that Nvidia's strategic motivation here is their long-term position w.r.t. Intel and AMD, maybe even Apple/Huawei/Samsung. And that's actually a good reason for this investment!

I likewise don't think destroying the ARM ecosystem is Nvidia's primary objective here - far from it. It might not even be a secondary objective. But I do think the ARM ecosystem will be slowly torn apart either as an innocent bystander or as a less prominent secondary objective (given real-world complexities, probably some combination of both). When Nvidia buys ARM, and they explicitly buy them to improve their competitive position, there's only one direction where I see the incentives going. Those will be against the open ARM ecosystem, which is a breeding ground for big and small competition against Nvidia.

Even if Nvidia's primary motives are relatively benign, I think they'll inevitably create a sitation where the ARM ecosystem can't continue existing in its current form. That's where the real tragedy will be.

Or to make sure they can't be left in the dirt by somebody else. If Apple, for example, would have bought ARM, I could imagine them quite hostile to NVIDIA.

How do we know that Samsung hasn't stifled some potential competitors by refusing to sell them screens or by selling them an inferior product?

Samsung makes (excellent) screens for iPhones, which are huge competitors to Samsung's own flagship phones, but Samsung still seems happy to take the profits from the screen sales. If there are smaller potential competitors that Samsung won't work with it's most likely because the scale is too small to be in their economic interest, not because they're rejecting profits in order to stifle potential competitors.

iPhones sell massively well though, to the point where it would be a big loss if Apple went to another company for their screens. You just can't screw with a company the size of Apple without consequences. It's not like they'd go "oh no, no more iPhone now I guess :'(" if Samsung decided not to sell them screens anymore.

The problem is more with smaller companies that could be destroyed before they even get a chance to compete. Those can be bullied pretty easily by a company the size of Samsung.

I don’t really see how it works both ways. It’s hard to imagine a bigger scarier competitor to Samsung than the Apple iPhone, yet we agree Samsung is happy selling screens to Apple.

I recall reading a breakdown at one point a few years ago that indicated that between screen, fabs (before Apple went for TSMC) and memory, Samsung made more money from each iphone sold than they did for each galaxy S phone of the time. Seems like a winning deal to me.

Because there are a lot more Androids and other devices that need screens. If they didn't make screens for Apple, a competitor would.

Apple is a much bigger company than Samsung, they can't realistically turn down a contract that big when LG is lying in wait to take all that money.

Not really. Revenues and Profits of Samsung group and Apple are roughly comparable and in many ways Samsung's revenue streams are more diversified and sustainable.. stock valuation notwithstanding.

"stock valuation notwithstanding" Perhaps you were thinking of Samsung Electronics, not Samsung Group.

There isn't really much outside Samsung Electronics in terms of revenue/profit.

Samsung SDS made $635 million in profit in 2019 which I think was higher than ARM? As far as I'm aware the 'Samsung Group' doesn't actually have all the companies under that so it's difficult to see what the overall revenue/profit is of the entire 'group'. It has quite a few other companies, like heavy industries, insurance, asset management, etc and I think they all have thousands of employees and are very large companies in their industries so I'd be surprised that when combined the other companies weren't significant. Did you have any data on this?

That is the key. There are and need to have alternatives. Real one.

Not the one to rule them all is the key to every innovation.

Samsung is a massive company ... the division that handles screens is managed independently from the one that makes smartphones.

It must be probably weird for Apple technical staff to communicate so closely with one division of Samsung while fighting for market share with another division of the same company.

> Samsung makes (excellent) screens for iPhones, which are huge competitors to Samsung's own flagship phones, but Samsung still seems happy to take the profits from the screen sales.

What markup does Apple pay for Samsung OLED displays compared to Samsung’s other OLED customers? I think this is highly relevant if you want to use it as an example. Because if the markup for Apple is 5x that of other buyers of Samsung OLED displays then you certainly can’t say Samsung is “happy” to sell them to Apple.

Same for nVidia-owned-ARM: if they’re happy to sell ARM licenses at 5x the previous price, then that will surely increase sales for nVidia’s own chips. I guess my overall point is: a sufficiently high asking price is equivalent to a refusal to sell.

demanding information that you know nobody will be able to produce is an unethical debating tactic.

obviously nobody but Samsung and their customers will know that information, and anyone who could reveal it is under NDA.

Apparently the prices are good enough that Apple doesn't go elsewhere.

Resources are limited. If a Samsung phone and a Motorola phone need the same screen and there's not enough to go around, what happens?

A bidding war of course.

On the surface, it's capitalism at work. In reality, Samsung winds up in a no-lose situation. If Motorola wins, Samsung gets bigger margins due to the battle. If Samsung wins, they play "pass around the money" with their accountants, but their only actual costs are those of production.

I'd note that chaebol wouldn't exist in a free market. They rely on corruption of the Korean government.

Screen manufacture is a highly competitive market. ARM licensing isn't.

The main difference I'd say is that ARM holds more of a potentially captive industry that is totally intertwined with its IP. Most of the products that Samsung sell to other industries are more or less fungible with products that other third parties sell but the ARM design rights are going to be incredibly difficult to replace. Entire ecosystems of electronics and software are built on it.

There's a whole lot of inertia for Nvidia to take advantage of here while the rest of the industry figures out where it's going.

The reason that ARM is only worth 30-40 billion while powering nearly all smartphones and much of the embedded space is because their business model is not that profitable. If Nvidia is looking for profits, ARM is a bad investment. If they are looking for synergies to boost nVidia profits, it will be done at the expense of other licensees. That's exactly what people fear.

Didn't Samsung stopping selling flash chips to ouside parties when it suited them?