Nvidia has made a $40bn (£30.8bn) bid to buy Arm to address the data centre server market – the core business of a failing Intel. Nvidia plans to take the microprocessor crown from Intel by winning the server market based on Arm architecture.
To understand the implications of such a takeover, we need to consider the markets for the three basic types of processor: scalar processors that power servers, PCs, smartphones and the IOT, and vector processors for graphics – not to be confused with graph processors for AI. The UK has good access to scalar processors with Arm for smartphones and IOT, but it suffers from the duopoly of Intel and AMD in PCs. Apple has just moved from Intel to Arm for its iMac PCs.
Arm has a chance to move into this space and increase competition for PC processors.
The graphics market is a duopoly at the high end with Nvidia and AMD, with suppliers like Arm, Imagination and others in smartphone graphics.
The real battleground of the future, though, is data centres using servers, and graph processors for AI. Intel has a dominant position, together with AMD, but has stumbled at the latest semiconductor nodes. This is the great opportunity for Arm to resume its growth by developing new server processors and licensing them around the world. This would increase market choice beyond Intel and AMD.
Last but not least, they can set a new standard of graph processors for AI. Fortunately, Britain has the leading company in this space, Graphcore, which has designed an architecture custom-made for AI graph problems.
Nvidia’s recent stratospheric rise is due to its high-performance graphics processor units (GPUs). Graphcore outperforms the best Nvidia GPU chips by a substantial margin.
I applaud Dominic Cummings’ ambition to create a £1 trillion firm in Britain. If there ever was the prospect of an industrial strategy, then starting with the dominant position of Arm in smartphones and IOT, and adding next-generation server products, must be the best chance we have to achieve it, especially if combined with Graphcore’s AI capabilities.
This would make Arm the most comprehensive supplier of processors to the world.