Nvidia Analyst Says Chipmaker Could Try This 'Plan B' If Arm Deal Falls Through

Market Trading EssentialsSeptember 17, 2020

1 minute read

endorsed by most Wall Street analysts.” data-reactid=”19″>NVIDIA Corporation’s (NASDAQ: NVDA) proposed deal to buy U.K. chip designer Arm Holdings was endorsed by most Wall Street analysts.

An analyst at BofA Securities says Nvidia could do well even if the proposed deal falls through.

In China, 95% of internal products are designed using Arm, the analyst said.

The deal would require Nvidia to shell out $40 billion in stock and cash, resulting in a benefit-cost ratio of 3-to-1, he said.

INTC) x86 servers, Arya said.

Arm, which dominates low power/low-performance mobile/IoT markets, has a mere 3% share in the server market compared to 90% for Intel, the analyst said.

Nivida’s GPU, he said. ” data-reactid=”31″>Nvidia has the ability to create a new category of Arm-based servers that flexibly spread workload across a pre-possessing layer, Arm-based CPU and acceleration layer, which is Nivida’s GPU, he said.

The Plan B envisages a $2-billion down payment and expands Nvidia’s total addressable market by at least $20 billion, suggesting a more attractive cost-benefit, Arya said.

The option makes it harder for Nvidia to drive Arm’s roadmap and eliminates or minimizes its opportunity to cross-sell its graphics and AI technology to Arm’s larger mobile and IoT base, the analyst said.

“However, we argue, the overlooked Plan ‘B’ (not mutually exclusive) could be meaningfully incremental to NVDA’s solid organic opportunity.”

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