M&A

It Takes an Army

The speculation was true.

In the biggest chip deal ever, SoftBank has agreed to sell UK-based Arm Holdings to Nvidia for $40 billion in cash and stock. The B2B deal is likely more consequential than the TikTok spectacle hogging the limelight. 

Even so, regulators won’t be rubber-stamping this tie-up. Nvidia expects the nuptials in ~18 months. 

In newsletter terms, that’s light-years away

And Arm’s own cofounder, Hermann Hauser, wants to stop the deal. In an open letter to PM Boris Johnson, Hauser said a Nvidia takeover could damage the UK tech sector and nullify Arm’s neutrality. 

Neutrality? Arm designs chip blueprints and licenses them to 500+ companies, making it the Switzerland of semiconductors. Nvidia says it will honor Arm’s customer neutrality and open-licensing model. 

What’s in it for Nvidia? 

Explicit: “We are joining arms with Arm [haha] to create the leading computing company for the age of AI,” Nvidia CEO Jensen Huang wrote to employees [parenthetical mine]. Huang mentioned “AI” 14 times in the memo and said Nvidia will break ground on a “world-class AI research center” in Cambridge, Arm’s HQ.  

• The combined R&D teams will turbocharge Nvidia’s data center, edge AI, and IoT business lines, per Huang. 

Reading between those lines: Nvidia was a huge winner of the machine learning renaissance. It already has a robust data center business. Arm was recently eyeing a spinout for its IoT business to focus on mobile chip design, its core competency. 

Mobile was likely a clincher for Nvidia, even though the company didn’t say so. Arm’s blueprints are in nearly every phone in the world. Nvidia may have steered clear of discussing that due to antsy-trust concerns and antsy Arm customers/Nvidia competitors. 

Zoom out: The proposed sale would give Washington more leverage over origin technology. China is a key market for Arm, and regulators there could scuttle the deal or extract tech transfer concessions. RISC-V, a fledgling open-source chip design effort, may also rake in more investment and club members. 

WEARABLES

Watch What Happens Live

Whatever your five-year plan is, Apple probably has you beat. In 2015, it released its first Apple Watch—and as of June 2020, it’s cornered the smartwatch market with 51% of global shipments. 

Time flies...as the company’s 2020 event tagline points out. Yesterday it announced the Apple Watch Series 6 and lower-cost Apple Watch SE. 

The former’s headline features include: 

• Blood oxygen level measurement via infrared light. This is especially relevant right now: Research suggests Covid-19 patients can experience dangerously low blood oxygen levels with few signs.
• ECG on the go. Stanford research suggests wearables, including the Apple Watch, can safely detect heartbeat irregularities—including the most common type, atrial fibrillation.  

In this case, the FDA granted both features “De Novo classification”—an alternate pathway to classify novel, low- or moderate-risk medical devices—for most U.S. users ages 22 and older. 

Big picture: This comes at a time when tech giants are betting big on wearables—and health-conscious consumers may be willing to invest more in it, too. The global wearable tech market is projected to grow to ~$106 billion by 2027, compared to ~$32 billion today.

SPONSORED BY GRAZE

You’re Cutting It Pretty Short

You only have until September 18 to invest in Graze, the electric, autonomous lawn mower robot that’s mowing down the $100 billion landscaping industry.

What makes Graze a cut above the rest? It’s electric, boosted by solar power, quiet, and can help landscapers save on fuel costs—all while being an answer to labor shortages. 

And you only have until the end of this week to get in on this Lord of the Lawn, this Grass Genius, this freakin’ LAWN MOWING ROBOT.

It’s an investment that’s sure to grow taller than the tall fescue in your backyard.

Invest in Graze before the deadline of September 18 or you’ll be cut out of the deal.

AI

The Gift of Gab

Consumer chatbot usage increased from 13% in 2019 to ~25% in 2020—almost double, according to research by chatbot maker Drift and Heinz Marketing. The bots are leveraged by retailers, banks, nonprofits, and more.

What’s behind the growth spurt? Dr. Vasant Dhar, a professor and AI researcher at NYU, named four factors... 

• Virtualization: The more we interact through machines, the more natural it feels to talk to them.
• Efficiency: If you have a choice between a 30-minute hold time or a chatbot, you’ll probably choose the latter. 
• Nature language processing advancements: Chatbots have gotten smarter over the past few years, moving beyond keyword-matching to understand some intent and context, too. 
• Accessibility: It's never been easier to train a simple conversational system. 

Also, customer service reps are inundated with calls right now. Plus, reps don’t always have WFH setups conducive to their jobs. 

But chatbots have limits: They’re typically used for routine applications. “You can’t be talking to a chatbot if there’s a high cost of error,” says Dhar. 

Bottom line: As remote life continues, chatbots will likely keep on collecting popularity points.

BITS & BYTES

Stat: Douyin, TikTok’s Chinese companion app, has 600 million daily active users. On Monday, TikTok said it passed 100 million monthly active users in Europe. The app also has 100+ million MAUs in the U.S. 

Quote: “So I suspect it will not be transformative. I'm speaking against my own interests, right? We're supposed to paint this picture of nirvana; however, I just don't think it's nirvana.”—Strauss Zelnick, CEO of gaming company Take-Two Interactive, dishes his take on cloud gaming to Protocol. 

Read: What happened when a Florida sheriff implemented a Precog-style predictive crime tool? An eye-opening investigation from the Tampa Bay Times. 

SPONSORED BY CROWDSTRIKE

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WHAT ELSE IS BREWING

• One more thing: Apple also announced two new iPad models (the new iPad Air and the 8th-gen iPad) and an “Apple One” subscription bundle for iCloud storage, Apple Music, Apple News+, Apple Arcade, and more. 
• GM is thinking about flying cars. Between this and the Nikola investment, the automaker is channeling strong Other Bets vibes.  
• YouTube launched Shorts, its answer to TikTok, in India. 
• IBM published a roadmap for scaling quantum computing. 
• Nikola says its hydrogen semi-truck never moved via its own power. 
• Amazon is growing its e-bike delivery team. 
• Microsoft's xCloud launched yesterday. Check out the Brew’s primer on cloud gaming.

TRIVIA

You’ve had a few weeks to digest the Brew’s AI guide. If you haven’t seen it yet, 1) it’s a snack and 2) you can check it out here. Today’s trivia tests your comprehension of the technical nuts and bolts that make up our most common AI systems.   

Take the quiz here.

TECH THINGAMABOBS

For history buffs: Between 1939 and 1941, the WPA and NYC Tax Department stockpiled photographs of every building in the city’s five boroughs. Now, those images have been digitized and placed on an expansive map. Check it out. 

For undersea exploration: Two years ago, Microsoft sunk a data center 117 feet into the ocean off the northern coast of Scotland. Now that it’s been retrieved, “Project Natick” suggests that underwater data storage could be our future.

ICYMI

Catch up on the top Emerging Tech Brew stories from the past few editions: 

• Walmart and Zipline launch drone delivery pilot 
• Portland passes strictest U.S. facial recognition ban
• Commercial cleaning bots on the rise