Nvidia Corp has announced that it will buy a chip designer ARM for $40 billion. SoftBank Group Corp.’s has agreed to sell the chip in a deal to Nvidia Corp. The Arm will work as a division of Nvidia and the headquarter will remain in the UK.
Softbank Sells ARM to Nvidia For $40 Billion
In 2016. SoftBank bought Arm for $31 billion. The company helps power mobile device processors for companies like Apple, Samsung, and Qualcomm.
The Nvidia company said,
“continue to operate its open-licensing model, while maintaining its global customer neutrality.”
The deal will be an important supplier to Apple Inc and others in the industry, with control of a single player. From regulators and Nvidia rivals it will face potential pushback.
First Nvidia will pay $21.5 billion to SoftBank in shares and the $12 billion in cash, including $2 billion on a signing. Softbank may get an additional $5 billion cash or stock if Arm’s performance will be great. In Nvidia stock, more $1.5 billion will be paid to Arm employees.
The company SoftBank paid $31.4 billion to a Japanese company to buy Arm. Earlier, it was the semiconductor industry’s biggest deal. It is said, that SoftBank will own less than 10% of Nvidia for the transaction. The approval might take long as 18 months before the transaction. The deal of selling ARM needs sign-offs from U.K, China, the European Union and the U.S.
Nvidia said,
“The U.K. company will continue to operate its open-licensing model while maintaining the global customer neutrality that has been foundational to its success. Nvidia will add its technology to the offerings licensed by Arm, the Santa Clara, California-based company.”
The Chief Executive Officer of Nvidia Jensen Huang said, that he wants to expand Arm’s business model to its broad client list. However, the deal will upset Arm’s relationship with customers like Apple Inc. The company Nvidia is spending money on buying Arm and has no reason to do anything which would cause clients to walk away.
The deal might get approval in March 2022. Nvidia will licence the flagship graphical processor unit through ARM’s network of silicon partners. It will build chips for self-driving cars and will be available for others also.
The chief, Huang said, both the companies did not discuss about the deal with the British government as the talks were secret. A new artificial intelligence research centre will be built in Cambridge headquarters of ARM.