How Did Nvidia Become The Biggest Player In The World Of Chips? The Success Story Of The World’s Largest Graphics Chip Manufacturer

Jensen Huang, The CEO Of Nvidia, Managed To Put The Company Under His Supervision On The Path Of Competition With The Giants Of The Technology World And Stand A Few Steps Higher Than The Competitors With The Purchase Of ARM. 

In the middle of the coronavirus crisis and when all companies were looking for solutions to deal with this crisis and maintain their position in the highly competitive market of the technology world, Jensen Huang made one of the most significant events in Nvidia’s history in his kitchen.

Interestingly, since the coronavirus epidemic, Huang has organized all his conferences virtually in this kitchen.

How did Nvidia become the most significant player in the world of chips?

  • Jensen Huang announced that after many months and intensive negotiations to purchase Arm Company from Softbank, this contract worth 40 billion dollars had been concluded. This news increased the value of Nvidia‘s stock and put Huang on the path to becoming the essential CEO of the world’s semiconductor industry. The world’s major media consider the transfer of ARM from its Japanese owner Softbank to Nvidia as the most significant sale contract in the history of the chip industry. This contract can make Nvidia the most influential player in processing and mainly parallel computing. Some experts in the field of computing believe that the above purchase will make parallel computing and especially intelligent algorithms more widespread. The above acquisition is a significant threat for Intel, as it may end its dominance in the world of personal computers and servers. Nvidia will gain the capacity to become the undisputed powerhouse of the computing world and provide a wide range of intelligent equipment. According to experts, this is the biggest threat in the history of Intel. Of course, to achieve such an important goal, Huang faces various challenges, especially from the side of the legislators and competitors. The agreement to purchase Aram can be considered an important achievement in the success of Nvidia. The path that took this company from the manufacturer of professional graphics cards for games to the most valuable American company in the world of chip converts. In his recent interview with the Wall Street Journal, Huang said: “Two years ago, I would not have predicted that Nvidia would reach such a position.” Nvidia’s market value has reached a staggering $319 billion, more than Intel’s $214 billion market value. Nvidia posted annual sales of $10.92 billion last fiscal year, while Intel reported annual sales of $71.97 billion.
  • Nvidia‘s desire to enter and operate in important and hot areas of the technology industry, such as video games and artificial intelligence, has attracted more investors. On the other hand, Intel has faced severe challenges in producing some of its most advanced chips. Its market is being invaded daily by various competitors such as AMD. Now Nvidia .is threatened. In 1993, at its 30th birthday party, Jensen Huang got the idea to start a technology company with some friends in San Jose, California. They sought to realize the vision that consumers could use computer graphics better—achieving better and more advanced computer graphics required specialized high-performance hardware that was not available to everyone at the time. Huang and his friends’ investment in 1993 were successful. During those years, defined video games experienced rapid growth and more and more new applications for GPUs. Chip Nvidia graphics manage and process data differently than regular processors to provide the best video content. They use a parallel structure for data management, which is different from the standard sequential design. The above approach has improved GPUs in other areas, such as cryptocurrency mining and intelligent algorithms. This issue has increased the sales of advanced graphics cards.
  • Huang, 57, was a follower of Steve Jobs early in his career and wore a black leather jacket that closely resembled Steve Jobs’s turtleneck. Like the late Steve Jobs, Huang walked on stage at the company’s new product unveiling ceremony and imitated Steve Jobs’ style of expression. If Huang did not have a close relationship with the CEO of Softbank, Masayoshi Sun, the $40 billion contract to purchase would not have quickly realized Arm. In 2016, Mr. Sun bought Cambridge, England-based Arm for $32 billion. At the end of June, SoftBank invested in the company by buying shares of Nvidia worth approximately $245 million. Softbank to encourage NvidiaHe contacted Hwang to close this contract early this year. In an interview, Huang said, “I realized that Softbank is no longer interested in being owned by this company, so I decided to negotiate with them quickly. “All this time, I tried to get Nvidia to give the highest offer to buy the logo.”
  • In financial negotiations with SoftBank, Huang did not use outside legal and finance teams and instead identified a group within the company to buy Arm. Amid the Coronavirus, he reviewed all the contract details, not from his headquarters in Santa Clara, California, but his home in the hills of Palo Alto. It organized all the conferences and new products from the same house and even decided to introduce some products from the kitchen (Figure 1). He also used the famous leather vest in these unveilings. James Wang, a former Nvidia executive who is now an analyst at New York-based Ark Invest and has made investments in Nvidia, believes that the purchase of Arm shows that Huang knows the next step in his company’s development is not possible without outside help. ” Nvidia,” he says, was a company that shied away from acquisitions and mergers but now has a penchant for significant investments. The exact behavioral change will make Nvidia a severe competitor to companies like Intel in computing fields.”

How did Nvidia become the biggest player in the world of chips?

  • Arm, a company known for designing high-performance chips, will now work as a new division for Nvidia. Therefore, it is not far from the expectation that Nvidia can beat Intel in various markets of the chip industry in the future. For example, Apple’s decision to migrate from processors based on Intel’s x86 architecture to ARM is an essential step in changing the structure of this industry, in which Nvidia will play a significant role. Huang believes that Nvidia can bring logos to the world of artificial intelligence processing and import and produce smart chips for smartphones, watches, gadgets, and self-driving cars in the next step. Aram has no critical commercial activities in these areas and has a weak presence.
  • On the other hand, Nvidia could bring ARM-based devices into the world of server CPUs. With this approach, large data banks use ARM processors, and even supercomputers become ARM clients. The combination of these factors will make Intel face a severe crisis in the long run.
  • Eric Ross, the chief strategist at Cascend Securities in New York, said: “Huang had been planning to fail Intel for two decades. From that time, he was sure that GPUs would become the main power of the computing world and even replace CPUs. “Now it seems that some of Huang’s predictions have come true after a relatively long period.”
  • Nvidia‘s movement process in the past years has not always progressed and has also faced challenges. Nvidia met declining sales in 2018 after the explosive growth of cryptocurrencies and the relative reduction of cryptocurrency fever. Also, the attempt to enter the world of modems used in smartphones, which began in 2011 with the purchase of a company in this field, failed in 2015, and finally, Nvidia put the said subcategory up for sale. Also, due to the sale of artificial intelligence chips to some foreign companies, they faced a lot of pressure from the US government.
  • Selling Logo to Nvidia is likely to cause severe challenges for Huawei because Huawei is one of Logo’s primary customers. If Nvidia acquires the company’s ownership and licenses for Logo, Huawei may face serious problems securing approvals. Of course, Nvidia has faced various issues in previous purchases. Nvidia‘s biggest acquisition to date was the $7 billion acquisition of Mellanox Technologies, which was delayed due to strict regulatory rules in China and finally finalized in early April this year. British politicians have voiced their concern about possible job losses at Arum’s home base for some time. Currently, Aram has about 6,700 employees. With the sale of this company to NvidiaMost of them face the risk of unemployment. On the other hand, Arm and Nvidia have committed to launching an artificial intelligence research center with a new supercomputer in Cambridge so that British researchers and other activists in this field around the world can use it.
  • Experts have predicted that chip industry activists will continue to oppose Arm’s deal with Nvidia. Some of Arm’s customers are Nvidia‘s competitors, and maintaining neutrality will be a problem for Arm if the contract is finalized. Aram has a brilliant history due to its impartiality and presentation of its designs to the activists of this industry. Of course, Arm and NvidiaThey have emphasized that the neutrality of this company will continue as before. Huang, who once predicted increased demand for high-graphics content, now foresees a future requiring more professional processing. His recent virtual conference said, “In the future, all people will need technologies in their homes to send and receive data quickly. We must wait for the future when such needs and markets become real. “Markets that help chip industry players grow bigger day by day .”