NVIDIA to Buy Arm for $40 Billion

Credit Gordon Mah Ung  IDG

Four years after buying Arm Holdings for $32 billion, Softbank is selling Arm to NVIDIA for $40 billion.

"Together we're going to create the world's premier computing company for the age of AI", Huang told reporters. Also, Nvidia will issue $1.5 billion in equity to Arm employees.

The initial payment to SoftBank is a small premium over the US$31.4 billion the Japanese company paid to acquire Arm in 2016, previously the semiconductor industry's biggest deal.

The company says it will continue Arm's current business model of licensing designs to other customers.

"Arm plays in areas that Nvidia does not or isn't that successful, while Nvidia plays in many places Arm doesn't or isn't that successful", said Moorhead in a Forbes op-ed late Sunday.

"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 Arm CEO Simon Segars in the press release.

Under Huang, Nvidia has risen rapidly up the ranks of technology companies in market value and influence. He described Arm as "the Switzerland of the semiconductor industry" because it deals in an "even-handed way" with over 500 licensees, a position Hauser said would be compromised by the deal. Chips that use its code and its layouts are in everything from factory equipment to home electronics.

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The acquisition is fueled by the drive to bring artificial intelligence to everything that has an on-switch.

"SOCs [system-on-chips] really don't have the benefit of the wonderful GPUs that we make, and Nvidia is well known around the world for the energy efficiency and advanced capabilities of our GPUs", said Huang at one point.

"It's a company with reach that's just unlike any company in the history of technology", Huang said in an interview.

When Softbank acquired ARM, it promised to keep the company's headquarters in the United Kingdom and to increase the number of local jobs, which it did. They've been in the processor business since the 1980s, and if you've used a computer in your life, you've likely used something from Arm.

Arm is the most important technology company in Britain, and one of a handful of European tech groups that operate on a global scale.

One customer that will be directly challenged is Intel. There are far more devices shipped each quarter running on ARM CPUs than x86 chips and GPU shipments per quarter combined, but volume alone doesn't dictate valuation. In turn, Softbank gets a 10 percent stake in NVIDIA and is "committed to Arm's long-term success". Huang said that commitment demonstrates how the acquisition will add to the U.K.'s technology footprint rather than detracting from it.

Although NVIDIA's dominance is primarily centered around its GPUs, the company has been toying with hardware production that targets AI applications (much like other big chipmakers have) such as its Jetson boards for "next-generation autonomous machines", which feature an Arm architecture. Nvidia failed in the mobile chip market but in the past decade has redefined itself as a producer of high performance chips in the data centre, especially those needed for cloud AI. The stock, which ended 2010 at US$15.42 a share, closed Friday at US$486.58.

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