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Nvidia Paying an Arm and a Leg for ARM in Record-Breaking $40 Billion Deal With Softbank

Nvidia Paying an Arm and a Leg for ARM in Record-Breaking $40 Billion Deal With Softbank

Nvidia has announced that it has agreed to purchase Softbank’s ARM for $40 billion, marking the largest chip manufacturer deals in history.

The deal was announced on Sunday. The deal involves $12 billion in cash, with $2 billion due at signing. Nvidia will also cough up $21.5 billion in stock, with ARM employees receiving $1.5 billion in Nvidia stock.

“AI is the most powerful technology force of our time and has launched a new wave of computing,” said Jensen Huang, founder and CEO of NVIDIA. “In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people. Our combination will create a company fabulously positioned for the age of AI.”

“This combination has tremendous benefits for both companies, our customers, and the industry,” Huang added. “For Arm’s ecosystem, the combination will turbocharge Arm’s R&D capacity and expand its IP portfolio with NVIDIA’s world-leading GPU and AI technology.

A purchase of ARM by Nvidia will benefit the graphics chip producer by giving it access to more patents and intellectual property which can be used to enhance its own offerings. It will also act as an opening for the firm to move deeper into processor sales.

Nvidia will be providing more information about the deal on Monday evening in a conference call.

ARM will continue to be based in Cambridge, UK. Huang says that the facility will be expanded into a “world-class AI research facility” with the goal of attracting researchers from across the world.

Nvidia is planning on building an AI supercomputer, powered by ARM technologies.

Softbank has owned ARM since 2016 when it purchased it for $32 billion.

“NVIDIA is the perfect partner for Arm,” said Masayoshi Son, chairman and CEO of SoftBank. “Since acquiring Arm, we have honored our commitments and invested heavily in people, technology and R&D, thereby expanding the business into new areas with high growth potential. Joining forces with a world leader in technology innovation creates new and exciting opportunities for Arm. This is a compelling combination that projects Arm, Cambridge and the U.K. to the forefront of some of the most exciting technological innovations of our time and is why SoftBank is excited to invest in Arm’s long-term success as a major shareholder in NVIDIA. We look forward to supporting the continued success of the combined business.”

The deal has been approved by the boards of directors of ARM, SoftBank, and Nvidia, the deal isn’t final. The deal still needs to get through regulatory hurdles not just in the US, but in China, The European Union, and the UK as well. Since ARM licenses its technology to numerous other companies, including Apple, AMD, Intel, and Qualcomm, the deal could face regulatory questions.

The ARM deal should not affect Apple’s Apple Silicon ARM-based processors destined for use in upcoming Macs. The Cupertino firm also uses Arm-based A-Series processors in it’s iPhone, iPad, and Apple TV devices.