Nvidia buys ARM from Softbank for record-breaking USD 40 billion


US graphics chips maker Nvidia has confirmed that it will be buying UK based chip designer ARM from Japan’s Softbank for USD 40 billion (~RM166 billion). The deal is set to create a new giant in the chip industry, propelling Nvidia to greater heights as it leverages on ARM’s technologies to gain a foothold in the realm of mobile computing.

Softbank acquired ARM back in 2016 for USD 31 billion (~RM129 billion) in what was considered the semiconductor industry’s biggest deal at the time. The Japanese tech conglomerate will own less than 10% of ARM following the sale to Nvidia.

Nvidia is the leading maker of GPUs, which ARM also designs, with its hardware used to power today’s cutting edge video games. The Santa Clara based has also diversified to other areas including artificial intelligence (AI), self-driving cars and data centres. The company recently launched its latest RTX 30 series GPUs that promise to support up to 8K gaming.
Nvidia CEO Jensen Huang holding one of the company’s latest RTX 30 series GPUS.

ARM meanwhile supplies its chip technology, that powers mobile processors, to a variety of companies including Apple, Samsung and Qualcomm. The Cambridge-headquartered company does not make chips but licenses out its technology for others to make chips with it. The company has risen to prominence of late as Apple announced its plans to switch future Macs to ARM-based chips.

Under the deal, ARM will operate as a division of Nvidia and will retain its headquarters in Cambridge where Nvidia said it intends to build a new AI research centre. Nvidia does not intend to rock the boat as it doesn’t want ARM to change its current licensing model, keeping its status as a neutral provider of technology. A report from Bloomberg said that Nvidia has no incentive to do anything that would clause clients to walk away.

Previously, Nvidia had big ambitions to diversify its business into making CPUs for phones. But Nvidia has not been doing much in terms of CPU design or mobile hardware aside from its Tegra mobile chipsets used in devices like the Nintendo Switch.

Both Nvidia and ARM see this as an opportunity to create AI software that leverage on ARM’s chips that run on everything from smartphones all the way up to servers. Last year, Nvidia expressed its interest to build supercomputers, with the help of ARM’s processors. The move was poised to help the company push deeper into advanced systems used for modelling complex problems like climate change predictions.

“AI is the most powerful technology force of our time and has launched a new ave of computing,” said Nvidia’s chief executive officer Jensen Huang in a statement. “In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people. Our combination will create a company fabulously positioned for the age of AI.”

Although both Nvidia and ARM’s boards have approved the acquisition, the deal will have have to pass regulatory approval in several jurisdictions including the U.S., U.K., E.U. and China. It is highly likely Nvidia’s purchase of ARM will face intense regulator scrutiny. The companies expect the transaction to close within 18 months should there be no delays.


Related reading