NVIDIA Prepares to Buy ARM

Yolanda Curtis
September 20, 2020

Shares of Nvidia Corp. are up more than 3% in premarket trading Tuesday after Needham analyst Rajvindra Gill upped his price target on the stock to $700 from $600.

The group has been selling assets to fund the buybacks and raise cash.

Technically Arm and NVIDIA are not direct competitors, since Arm licenses chip designs, but does not make its own processors, while NVIDIA designs and produces its own chips. A 33 percent return over four years isn't bad, but it's not great either. Those might include low-cost high-definition televisions and specialized tablet devices that come with the silicon smarts of advanced gaming computers, said chip analyst Patrick Moorhead. The thread below explores some of the obstacles it will face.

The U.K. government is considering attaching conditions on the number of jobs Nvidia Corp. will keep in the U.K.as part of its proposed takeover of Arm Ltd., the country's most valuable tech company, according to people familiar with the matter.

Huang said that Simon Segars and his team at Arm have built an "extraordinary company" that is contributing to nearly every technology market in the world.

"Arm and Nvidia share a vision and passion that ubiquitous, energy-efficient computing will help address the world's most pressing issues from climate change to healthcare, from agriculture to education", said Simon Segars, CEO of Arm.

As Huang points out, Nvidia already did the hard work of rewriting all its software code to run on Arm-based processors when it backed a Fujitsu supercomputer a year ago that is now the world's fastest.

"It's a disaster for Cambridge, the United Kingdom and Europe", Hermann Hauser told Reuters in an interview, referring to Arm's base in eastern England.

He refereed to Nvidia as being the "the ideal partner" for Arm Ltd.

When the acquisition of Arm is complete, Nvidia plans to invest in the English company's R&D efforts in Cambridge, promising the construction of a new supercomputer. "Joining forces with a world leader in technology innovation creates new and exciting opportunities for Arm".

Arm's move into interconnected home devices, the "internet of things", was a key factor behind Softbank's 2016 decision to spend £24 billion to acquire the group. "We look forward to supporting the continued success of the combined business".

He describes the company as the "Switzerland" of chip-makers, in that it designs neutral products that customers can customise to their needs. Expect to see opportunist political types publicly drop generic protectionist soundbites, which the companies concerned clearly anticipate.

Better yet, after laying the groundwork with CUDA support for Arm chips, Nvidia could use its newfound experience with CPU architectures to accelerate progress for full integration. Completion of the transaction is expected to take place in approximately 18 months.

NVIDIA said in a statement that under the deal it will pay SoftBank $21.5 billion in common stock and $12 billion in case, $2 billion of which will be payable at signing.

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