NVIDIA to Acquire Arm for $3.5 Billion | Rewire News Morning Update

NVIDIA Invests $3.5 Billion in TSMC to Secure AI Compute Tollbooth Position, Trump Stumps for Data Centers Nine Weeks Before Midterms

1｜NVIDIA Invests $3.5 Billion in TSMC, Sets Up Tollbooth on Custom Chip Battlefield

NVIDIA announced a $3.5 billion investment in TSMC through convertible bonds. At the core of the deal is the integration of the NVLink Fusion interconnect protocol and the newly released NVHBM technology into TSMC's data center chip designs. TSMC is ramping up its custom ASIC business, with expected revenues of $20 billion by 2026.

The timing of this investment is noteworthy. Amazon, Google, Microsoft, OpenAI, and Anthropic are all developing in-house AI chips to reduce reliance on NVIDIA GPUs. NVIDIA's response is not to resist this trend but to set up a tollbooth in the middle of it. Forbes terms it a "tollbooth strategy": even if customers don't buy NVIDIA GPUs, they can't bypass NVIDIA's technical standards at the chip interconnect level.

Previously known for mobile chips, TSMC has now become a foundry option for Big Tech's custom AI chips. NVIDIA's $3.5 billion investment is both a financial commitment and an entry fee to solidify this partnership.

(Source: Bloomberg / TechCrunch / Reuters / Forbes / Taipei Times)

2｜Trump Teams Up with AI Investors to Campaign for Data Centers in the Lead-up to Midterms

With less than 9 weeks until the midterms, Trump tells American communities opposing data center construction, "If you want to fall behind and be poor, go ahead." On the same day, Bloomberg reported that Build American AI, backed by a16z's Marc Andreessen, Ben Horowitz, and OpenAI's CEO Greg Brockman, launched a multi-state ad blitz with around $50 million in cash on hand.

The ads target swing states of Kansas, Ohio, and Wisconsin. Polls show that 61% of American adults oppose building data centers nearby, with at least 75 projects delayed or halted until 2026, involving approximately $130 billion in investments.

This marks the first large-scale lobbying effort by the AI industry in U.S. politics. In the past two years, tech companies have spent money on acquiring computing power, only to realize that even with ample chips, without data centers, their efforts are in vain. Trump is now hitching himself to the data center issue, betting that the political returns from the AI industry could translate into votes in the midterm elections.

(Source: Axios / TechCrunch / Tom's Hardware / Bloomberg / Washington Post)

3｜FTC Sues Amazon for "Secret Ad Fee," EU Designates ChatGPT as Super-Large Search Engine on Same Day

The FTC, along with 22 states, has sued Amazon, accusing the company of using "fictitious bidding participants" in ad auctions since 2019 to inflate prices, potentially overcharging over 1 million merchants by over $20 billion in seven years. Amazon stated that the lawsuit "fundamentally misunderstands how advertising works for sellers."

On the same day, the European Commission designated ChatGPT as a "super-large online search engine" under the Digital Services Act, making it the first AI chatbot globally to fall into this category. Reddit and Roblox were also listed as super-large online platforms. All three must comply with systemic risk assessment and content moderation obligations within four months.

The U.S. is flattening platform pricing from an antitrust angle, while the EU is regulating AI services from a content perspective. The paths are different, but the direction is the same: platforms that have grown up in a lightly regulated environment are running into structural oversight.

(Source: FTC / TechCrunch / The Verge / European Commission / Ars Technica)

Also Good to Know ↓

Tencent-backed AI chip company Horizon Robotics, with a 20% stake held by Tencent, is listing on the Shanghai STAR Market with plans to raise ¥6.12 billion (about $911 million). This is the last of the "Four Little Dragons" of Chinese AI chip companies to go public, with around 84% of its revenue expected to come from Tencent by 2025, beginning IPO subscriptions on September 2. (Source: Bloomberg / Reuters)

Prediction market platform Polymarket is reportedly securing a $300 million funding round led by Trump's son, Donald Trump Jr.'s investment fund 1789 Capital, totaling around $1 billion. Polymarket rose to fame during the 2024 election for accurately predicting outcomes. (Source: TechCrunch / WSJ)

A wallet associated with the North Korean Lazarus Group sold over $30 million worth of Bitcoin through Hyperliquid within three weeks. The proceeds were converted to Ethereum and Solana, then dispersed to various exchanges like Kraken and LBank. This incident occurred as the Trump administration pushed Hyperliquid into the U.S. regulatory market. (Source: CoinDesk / Arkham)

The House Intelligence Committee released a report warning that AI could be used to develop more lethal weapons, posing a "Black Swan" risk. The report also stated that China has infiltrated the U.S. power and water systems, describing the current threat environment as the "most complex and dangerous" since 9/11. The report was released on the eve of the 25th anniversary of 9/11. (Source: CNBC / News Nation)

Apple's App Store and keynote lead, Phil Schiller, stepped down from his core role. The change comes on Cook's last day as CEO, and Schiller will retain the title of Apple Fellow. (Source: TechCrunch / The Verge / Bloomberg)

OpenAI's commercial business has reached an annualized revenue of $1 billion. The Information reported that this figure signifies OpenAI has opened a third revenue stream beyond subscriptions and APIs. (Source: The Information)

Vice President Vance stated that Trump's deepfake video of the Houthi island attack was a way of "communicating with Iran." (Continuing from yesterday's report) On the same day, Treasury Secretary Bennett warned that Iran could face an economic collapse within months and held the first high-level face-to-face meeting with the Russian Finance Minister at the G20 meeting since the Russia-Ukraine war. The European delegation avoided the Russian representatives. (Source: Al Jazeera / Reuters / Axios)

Strategy resumed Bitcoin purchases after two months, buying 4,603 BTC at an average price of around $80,300 each (approximately $370 million). (Continuing from yesterday's report) The holdings have increased to 845,050 BTC. Strategy has recently started selling a small amount of Bitcoin to pay preferred stock dividends, deviating from Saylor's long-held "never sell" mantra. (Source: Fortune / CoinDesk / The Block)

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