Nvidia to Acquire Arm for $40 billion | Wibest Broker

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NVIDIA Corp

GPU king NVIDIA announced Sept. 13 it is acquiring chipmaker Arm from SoftBank for $40 billion. Arm will operate as a division of Nvidia and will remain headquartered in the UK.

The company said it will continue to operate its open-licensing model, while maintaining its global customer neutrality. But this deal will likely face intense regulatory scrutiny.

In 2016, SoftBank bought Arm for $31 billion. The British company’s intellectual property helps power mobile device processors for companies.

These include Apple, Samsung, and Qualcomm. Arm has increased in value since the SoftBank acquisition. 

Microsoft is making an Arm-based Surface and a version of Windows for Arm. Moreover, it’s making Apple planning to switch future Macs to Arm-based chips.

Nvidia is the leading maker of GPUs, which Arm also designs. But other than its Tegra line of mobile chipsets used in devices like the Nintendo Switch, Nvidia doesn’t do much. That’s in the way of CPU design or mobile hardware.

Nvidia CEO Jensen Huang said that his first priority would be to bring Nvidia technology through Arm’s vast network. However, according to reports, it doesn’t necessarily mean that Arm will change its current licensing model. 

Huang said, Nvidia is spending a lot of money for the acquisition. Furthermore, it has no incentive to do anything that would cause clients to walk away.

The deal stresses that Arm will continue to be headquartered in Cambridge. Perhaps to underline that it intends to keep Arm a neutral provider of technology in the short term.

UK and Nvidia said, it will invest in building a new AI research center. Nvidia is positioning the acquisition as setting up the next stage of AI. 

Nvidia and Arm’s Opportunities for Growth

The NVIDIA logo

Both companies see opportunities for growth in enabling AI software. It can run on Arm’s chips from those on tiny smartphones to big servers.

Nvidia once had big ambitions to make CPUs for phones. But it had little success and this acquisition could change that. 

It appears that at least, initially, the focus will be on data centers. 

What will change is the rate of their roadmap. They know for sure that data centers and clouds are clamoring for the Arm microprocessor, the Arm CPU.

Huang also said, energy efficiency directly translates to computing capacity, computing throughput, and the cost of provisioning service.

The news underscores just how successful Nvidia has been in the past five years. It has focused on areas like GPUs, self-driving cars, and AI.

The acquisition will of course face regulatory scrutiny. That is in an environment that’s less friendly to mergers than at any time in recent memory. 

The fact that Nvidia and Arm don’t directly compete could be helpful in navigating that process.

The $42 billion acquisition, comprises $12 billion in cash, $21.5 billion in stock, a $2 billion payment at signing. Moreover, $1.5 billion in NVIDIA stock for Arm employees and an additional $5 billion payment based on Arm’s performance. 

Arm will continue to operate in its Cambridge, UK headquarters and function as a division of the broader NVIDIA corporation. 

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