NVIDIA Prepares to Buy ARM

Ruben Fields
September 20, 2020

"Our combination will create a company fabulously positioned for the age of AI". SoftBank could receive up to $5 billion in cash or stock, subject to specific financial performance targets by Arm.

Softbank could receive an additional 5 billion US dollars in cash or stock options when the British chip designer hits certain financial targets agreed to by the parties, with the statement adding that Nvidia would extend 1.5 billion USA dollars in equity to Arm employees. Nvidia expects it to be finalised in around a year and a half, before which regulatory approval from China, the European Union, the United Kingdom, and the US will need to be obtained. The first is Nvidia's chipmaker rivals are anxious about Arm's array of designs and intellectual property being under the auspices of Nvidia.

Latham & Watkins acted as legal adviser to NVIDIA on the transaction, which will integrate NVIDIA's artificial intelligence (AI) computing platform with Arm's own software network, to create a prominent software company with strong AI capabilities.

SoftBank bought Arm for about $32 billion in 2016, in a deal that sparked fears one of Britain's most successful tech companies would succumb to a foreign takeover. It's the most expensive deal in the semiconductor space to date, and it would put NVIDIA in control of the technology that powers most of the world's smartphones and a growing number of other devices. This ownership stake in NVIDIA is expected to be under 10 percent.

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

SoftBank chief Masayoshi Son has made no secret of his frustration with varied criticism of his investment strategy, from his dogged commitment to floundering start-up WeWork to recent derivative trading that spooked investors.

"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. To attest to the same, the deal mentions that Arm will continue to be headquartered in Cambridge (UK), which will also be home to its upcoming AI developments. The upcoming center at Cambridge will include an ARM/NVIDIA-based supercomputer that will make use of state-of-the-art ARM CPUs, NVIDIA's most advanced GPU technology, and NVIDIA Mellanox DPUs. Companies like Apple, Qualcomm and others rely on licensing ARM technology, so there will be plenty of regulatory scrutiny before the acquisition can be approved. In May, Nvidia said it was buying Cumulus Networks for an undisclosed sum.

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