Chip shakeup

NVIDIA officially acquires Arm for $40 billion in bid for AI dominance

Chip designers at Arm have new owners under growing juggernaut NVIDIA.

What you need to know

• NVIDIA has officially started to acquire Arm Limited.
• NVIDIA plans to use the technology to continue its lead in AI.
• The deal is valued at $40 billion.

As expected, popular GPU and server provider NVIDIA is taking over SoftBank Group Corp. (SBG) 's share of Arm Limited. The deal's price is valued at $40 billion and was officially announced by NVIDIA on late Sunday night. In turn, Softbank gets a 10 percent stake in NVIDIA and is "committed to Arm's long-term success."

In the full press statement, NVIDIA cited multiple ways for the company to leverage Arm's research and development (R&D) and chip designs to accelerate its plans for artificial intelligence (A.I.) and modern computing solutions for enterprise and consumers.

Details in the announcement were highlighted as follows:

• Unites NVIDIA's leadership in artificial intelligence with Arm's vast computing ecosystem to drive innovation for all customers
• NVIDIA will expand Arm's R&D presence in Cambridge, UK, by establishing a world-class AI research and education center, and building an Arm/NVIDIA-powered AI supercomputer for groundbreaking research
• NVIDIA will continue Arm's open-licensing model and customer neutrality and expand Arm's IP licensing portfolio with NVIDIA technology
• Immediately accretive to NVIDIA's non-GAAP gross margin and EPS
• Consideration of $40 billion to be met through a combination of NVIDIA shares and cash

Arm will also remain in Cambridge, UK, for the foreseeable future:

Arm will remain headquartered in Cambridge. We will expand on this great site and build a world-class AI research facility, supporting developments in healthcare, life sciences, robotics, self-driving cars and other fields. And, to attract researchers and scientists from the U.K. and around the world to conduct groundbreaking work, NVIDIA will build a state-of-the-art AI supercomputer, powered by Arm CPUs. Arm Cambridge will be a world-class technology center.

Arm Holdings is separate from companies like Qualcomm, Apple, Texas Instruments, Broadcom, and NVIDIA. The former company designs and licenses chips, while the latter companies build off those platforms through customization and add-ons, while also manufacturing them (called ARM with caps). It will be curious to see if this deal with NVIDIA affects the long-term market for the various companies, but the whole point of Arm Holdings is licensing of the IP as the business model. There could be some downsides too, however.

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NVIDIA has quite a year with stock rallying more than 100 percent, and up over 40 percent from just May. While many know NVIDIA for its gaming GPUs, the company is very diversified with leading performance in various segments, including AI, machine learning, data centers, and self-driving cars.

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