It’s 3.30am in California and Jensen Huang, the outspoken chief executive of $300bn (£232bn) chip maker Nvidia is sitting in his spacious kitchen wearing one of his trademark leather jackets.
On a Zoom video call with journalists, the multi-billionaire seems genuinely puzzled by the concern being expressed in the UK over his announcement 11 hours earlier that he plans to buy Cambridge-headquartered chip design business Arm for $40bn.
“We would like to invest in the UK," he says, frustration evident in his voice. "I have a hard time understanding how that would be viewed as anything short of a wonderful thing.”
Huang — whose own stake in Nvidia is now worth nearly $12bn — is used to having things go his way. After all, his business has experienced explosive growth in recent years as it successfully transitioned from a focus on cutting edge hardware for gaming computers to producing chips for applications in artificial intelligence (AI).
Nvidia’s value has jumped tenfold since 2016, when the firm was worth about $30bn. Now Huang stands on the threshold of his biggest and boldest acquisition to date — but it’s unlikely to be plain sailing. He faces a battle to win over sceptics in the UK Government and in industry who remain suspicious of his grand plans for Arm, sometimes called the “crown jewel” in the UK’s technology scene.
Huang has never lacked ambition. Born in Taiwan in 1963, his family moved to the US in 1973. He spent part of his childhood scrubbing toilets in his school’s dorm rooms before graduating with a master’s degree in electrical engineering from Stanford University in 1992.
Before co-founding Nvidia on his 30th birthday in 1993, Huang had spent years learning the ropes of the arcane world of microprocessors.
Nvidia’s co-founders had correctly predicted a rise in demand for video games with improved graphics which would need more powerful processors.
They initially referred to their new company as “NV” — shorthand for “next version". Huang and his co-founders decided to keep the acronym, searching for a word which included it when they came to incorporate the business. They settled on a version of “invidia” — the Latin word for “envy.”
Nvidia began life at the beginning of the 3D graphics boom in video games, with customers beginning to shell out thousands of dollars for Nvidia graphics cards that gave them access to the latest titles.
Unsurprisingly, the business forged close links with the video games world. One advert for Nvidia’s products from 2000 produced in collaboration with Halo developer Bungie featured an in-game soldier calling the latest Nvidia processor “one mean piece of alien-busting hardware!”
A focus on video games worked, with the business floating in 1999. Huang told employees he’d get a tattoo of Nvidia’s eye logo if the company’s share price hit $100. He delivered, crying in front of his children as the tattoo was inked on his left arm.
Staying in the world of video games would have limited Nvidia’s prospects, however. So the business expanded to start producing processors for high-end computers, the sort of machines used by academics to crunch through large amounts of information.
In 2019, Nvidia forked out $6.9bn to buy Mellanox Technologies, an Israeli provider of computer hardware to data centres used by technology giants.
Nvidia chief executive Jensen Huang
Credit: Bloomberg
Making some of the world’s most powerful processors resulted in an unexpected boom. During the cryptocurrency boom from 2016 to 2018, demand for Nvidia chips surged as investors sought out powerful kit to mine bitcoin and other digital currencies.
Nvidia is currently fighting a lawsuit brought against it by a group of shareholders who accuse the company of understating how much of its revenues came from cryptocurrency customers. Nvidia has denied the allegations.
Either way, in recent years, Huang has overseen a switch in focus for Nvidia from producing gaming hardware to making components which are vital for running AI applications.
Microsoft-owned search engine Bing, for example, uses Nvidia processors for its AI system which analyses photos to detect products like handbags and shirts in photographs.
And automated electric vehicles in the Netherlands, known as WEpods, also use Nvidia hardware for their AI systems which gradually build up an understanding of the environment around them to help them to navigate.
No wonder, then, that as he sat on a Zoom call in his kitchen earlier this week, Huang was keen to talk about Nvidia’s newfound dominance in this sector. “We are the world’s leading AI computing company,” he said.
This pivot has impressed analysts and helped send the firm’s valuation soaring. “Nvidia has grown tremendously over the past few years,” wrote CCS Insights analyst Geoff Blaber. “Nvidia is taking a broader systems view and wanting to control more of the elements that underpin its solutions.”
Monday’s announcement that Nvidia plans to buy Arm, the chip design business which has managed to become an integral part of the world’s semiconductor industry, hasn’t been met with the rapturous excitement that Huang seemed to expect.
Arm co-founder Hermann Hauser
Credit: Getty Images Europe
Two of Arm’s co-founders, Hermann Hauser and Tudor Brown, have voiced their opposition to the deal. Mr Hauser went as far as writing to the Prime Minister urging him to intervene in the deal to prevent the UK becoming a “US vassal state”.
This reaction to Huang’s announcement means Nvidia is likely to need to navigate a complex regulatory environment in the UK, putting in place similar legally binding pledges to protect jobs as Arm’s current owner SoftBank introduced when it bought the business in 2016.
Nvidia will also need to resist the temptation to keep Arm’s most promising technologies for itself. Arm managed to grow to supply 95pc of the smartphone market, for example, because it has remained neutral in the competitive semiconductor industry.
“There’s just this fundamental dichotomy,” says Brown. “Can Arm be owned and operated by a company that has a very, very different business model and is a competitor to all its customers? I’ve never seen that happen anywhere else.”
But Huang remains confident that Arm can continue to retain a neutral stance in the industry, despite being owned by a leading chip maker.
“We largely don’t compete with the customers of Arm. We don’t make mobile devices, we don’t make embedded devices,” he said on Monday.
Arm Holdings timeline
Nvidia will also need to dispel concerns that buying Arm could see its chip technology dragged into the trade war between the US and China which has already seriously threatened businesses such as Huawei and TikTok.
The concern of sceptics like Hauser is that Donald Trump could block the export of Arm chip designs to Chinese businesses, substantially reducing its customer base.
Huang insists that the idea that Nvidia buying Arm would change the country of origin of its chips, dragging it into the trade war, is false. “That’s just wrong on facts, that’s wrong on merits. It’s just wrong."
For now, Huang remains relentlessly upbeat about the deal. “Our plans are credible, our ability is real and our intentions are genuine,” he says from his kitchen in the middle of the night. It remains to be seen whether he can win over the doubters and win control of one of the UK’s most promising technology businesses.
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