Nvidia to acquire Arm for US$40 billion

Yolanda Curtis
September 15, 2020

The known graphics card maker will be acquiring the chip designer for a deal worth 40 billion US Dollars, which was announced by both companies on Sunday (13th September 2020). The amount includes $2 billion in cash payable at signing and $1.5 billion in equity to Arm employees.

Nvidia, the biggest USA chip company by market capitalization, has agreed to buy Arm from Japan's SoftBank Group Corp., prompting the office of British Prime Minister Boris Johnson to say it would scrutinize the deal and act if necessary.

At any rate, assuming all goes through, Nvidia will be investing more into ARM's headquarters in Cambridge, UK. Lord Myners, the UK's former City Minister, said: "We need to recognise companies like Arm that are "world beating", as the Government likes to say, and make sure the locus of strategic decision making remains in the United Kingdom". But that's even more true than I had imagined: NVIDIA won over critics by pledging to keep Arm as a separate company with open licensing, and it will honor SoftBank's promises to keep Arm in Cambridge, England, it's long-time home. SoftBank initially acquired Arm for $32 billion four years ago. Its energy-efficient designs dominate the smartphone sector, with its licensees including Apple Inc. shipping 180 billion chips to date.

The deal, announced overnight, drew criticism from Hermann Hauser, a co-founder of Arm who said in an interview it would spell disaster for Cambridge, Britain and Europe. That, combined with the fact that the majority of the price will be paid in Nvidia stock (up 5% at time of writing on the news, having already doubled this year), means this deal has to be about more than just SoftBank covering its speculative positions. "Uniting NVIDIA's AI computing capabilities with the vast ecosystem of Arm's CPU, we can advance computing from the cloud, smartphones, PCs, self-driving cars and robotics, to edge IoT, and expand AI computing to every corner of the globe".

And seller SoftBank, the vituperated "Nasdaq Whale" - is it?; more here in case you missed it - is.

According to NVIDIA, Arm's open-licensing model and IP licensing portfolio will continue as normal while benefitting from NVIDIA technology, with clear, strong assurances on the front of customer neutrality. That business unit will be part of the deal with Nvidia, though the GPU manufacturer has reportedly made certain guarantees to the British government regarding the long-term protection of jobs associated with ARM in the UK.

In the same letter, Jensen notes that Nvidia will build a "world-class" AI center in Cambridge, where a state-of-the-art ARM-based supercomputer will conduct research. The other group the canned quotes are directed at is Arm customers, who will understandably be alarmed by the prospect of it being owned by a competitor.

The companies say it will likely take about a year and a half for the acquisition to be completed, because, among other things, it will need to be approved by regulators in the UK, US, China, and the European Union. Some recent Windows devices also use Qualcomm's Arm-based processors. And Apple plans to begin selling Arm-based Mac computer soon.

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