One of Britain’s most successful technology companies, Arm Holdings, is being sold by its Japanese owners for $ 40 billion in a deal that could reshape the semiconductor landscape.
Nvidia, a US company, will pay SoftBank $ 21.5 billion in shares and $ 12 billion in cash for the chip designer, although the deal is still subject to regulatory approval in the UK.
Nvidia is expected to face tough conditions to protect jobs and the status of Arm̵
SoftBank paid $ 32 billion to the company four years ago in a deal that raised a fortune for Arm executives. This time, Arm employees will share $ 1.5 billion in shares of Nvidia.
Founded in Cambridge in 1990, Arm specializes in microprocessors and dominates the global smartphone market. But its chips are also found in countless sensors, smart devices and cloud services.
California-based Nvidia is best known for graphics cards, which are preferred in the video game industry. During the coronavirus crisis, sales jumped sharply, as the game was popular in the past in conclusion.
Its products are increasingly used for artificial intelligence and in data centers.
With potential repulsion, Nvidia CEO Jenson Huang stressed that he would maintain Arm’s neutral licensing model and expand it by licensing Nvidia’s intellectual property for the first time.
This will create “the leading computer company for the era of artificial intelligence,” Huang said.
The companies did not discuss the deal with the British government shortly before the announcement, as the negotiations were secret, Huang said. A new artificial intelligence center will be built at Arm’s Cambridge headquarters.
“Cambridge will be a place to grow,” Huang said.
Nvidia started as a graphics chip designer and expanded into products for areas including artificial intelligence and data centers.
The acquisition of Arm will put Nvidia in even stronger competition with competitors in the data center chip market, such as Intel and Advanced Micro Devices, as Arm develops technology to compete with their chips.
It gives Nvidia control of Arm technology, which can be used to create its own CPU chips, doubling Nvidia’s strategy to buy technology in parts of the thriving business data center where it doesn’t currently play.
Arm does not make chips, but instead has created an instruction set architecture – the most fundamental intellectual property that underlies computing chips – on which it bases computing kernel designs.
Arm licenses its chip projects and technologies to companies such as Qualcomm, Apple and Samsung, which in turn use the technology in their chips for smartphones and other devices.
Upcoming Apple Macs will use Arm-based chips.
Softbank boss Masayoshi Son has used Arm’s potential but is cutting back on its fixed assets to raise money.
The deal will show SoftBank and the $ 100 billion Vision Fund, which has a 25% stake in Arm, will take a stake in Nvidia between 6.7% and 8.1%.
SoftBank can also be paid an additional $ 5 billion in cash or shares, depending on the chip designer’s business performance.