NVIDIA is buying Arm for $40 billion

Ruben Fields
September 14, 2020

After weeks of on-and-off speculation, Nvidia this evening confirmed that it intends to buy chip design giant Arm Holdings for a total of up to $40 billion from existing owner SoftBank, which bought the company for $32 billion in 2016. SoftBank may receive an additional $5 billion in cash or stock if ARM's performance meets specified targets and ARM employees will receive an additional $1.5 billion in NVIDIA stock.

Nvidia also pledged to keep ARM's open operating model, meaning customers would not be obliged to buy ARM-designed chips that are manufactured by Nvidia. "Someday, trillions of computers running AI will create a new internet - the internet-of-things - thousands of times bigger than today's internet-of-people".

Arm's importance far outweighs its revenue, which comes from licensing chip fundamentals and selling processor designs. While he's carved out a US$3 billion-niche in the business of supplying Alphabet Inc.'s Google and Facebook Inc. with graphics processors that help with their artificial intelligence workloads, Huang said he wants to speed up the adoption of Arm-based central processors, or CPUs. As Apple licenses the ARM chip architecture used in its A-series SoCs, it seemed plausible for Apple to have an interest, but report sources suggested it would be a poor fit with the rest of the company's business structure. In its press release, Nvidia has made it clear that Arm will continue to operate its open-licensing model.

Arm will function as a separate division within Nvidia and its headquarters will remain in Cambridge, England.

The deal creates the "world's premier computing company for the age of AI", said Nvidia on Sunday. The regulatory questions as to how the company will approach that responsibility are not unreasonable, but Nvidia is capable of addressing those concerns.

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.

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"If its partners believed that ARM's integrity and independence was compromised, it would accelerate the growth of RISC-V and in the process devalue ARM".

Arm, meanwhile, will get even more support for R&D efforts as well as access to NVIDIA's entire suite of products.

In recent days leading figures in the Cambridge technology sector have lobbied Downing Street, calling for ministers to intervene to bring ARM back under United Kingdom ownership.

The second major point of contention for the deal is within the U.K. According to a story by The Guardian, the Labour party, a science and technology workers' union and Arm co-founder Hermann Hauser have called on the government to use its powers to block foreign takeovers, or attach conditions to them.

A spokesman for Mr. Johnson said ministers had spoken to the relevant companies and were looking at what the deal meant for Arm's Cambridge base.

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