One of Britain’s most successful tech companies, Arm Holdings, is being sold by its Japanese owners for $ 40bn in a deal that could reopen the semiconductor landscape.
Nvidia, a US company, will pay SoftBank $ 21.5 billion in shares and $ 12 billion for the chip designer, although the deal is still subject to regulatory approval in the UK.
It is expected that Nvidia will face tough conditions to protect jobs and the position of Arm’s headquarters in Cambridge as part of the deal.
Softbank paid $ 32bn for the company four years ago, a fortune for arm executives. This time Nvidia will have a $ 1.5 billion stake in shares with arm employees.
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.
Nvidia, based in California, is known for graphics cards that are a favorite in the video game industry. It has skyrocketed sales during the coronovirus crisis, with lockdown being a popular past-time gaming.
Its products are also increasingly used in artificial intelligence and data centers.
With a possible pushback, Nvidia’s chief executive Jensen Huang insisted that he would retain the arm’s neutral license model and expand it by licensing Nvidia’s intellectual property for the first time.
This would make it the “premier computing company for the age of artificial intelligence”, Huang said.
Huang said the companies had not discussed the deal with the British government until shortly before the announcement, as negotiations were secret. A new artificial intelligence research center will be built at the Arm’s Cambridge headquarters.
“Cambridge is going to be a site of development,” Huang said.
Nvidia began as a graphics chip designer and has expanded into products for areas including artificial intelligence and data centers.
The Arm acquisition has put Nvidia in even more intense competition with rivals in the data center chip market such as Intel and Advanced Micro Devices as Arm continues to develop technology to compete with its chips.
It provides Nvidia control of technology from the arm that can be used to create its own central processor chips, doubling Nvidia’s strategy to buy technologies in parts of its growing data center business where it currently operates Does not play
Arm does not make chips, but has instead created an instruction set architecture – the most fundamental intellectual property that underpins computing chips – on which it designs for computing cores.
Arm licenses its chip design and technology to companies such as Qualcomm, Apple and Samsung, who in turn use the technology in their chips for smartphones and other devices.
Apple’s upcoming Mac computers will use arm-based chips.
Softbank boss Masayoshi Son has used Arm’s ability, but is wagering its stakes in key assets to raise cash.
The deal will see SoftBank and the $ 100 billion Vision Fund, which has a 25% stake in Arm, take a stake in Nvidia between 6.7% and 8.1%.
SoftBank may be paid an additional $ 5bn in cash or shares, depending on the chip designer’s business performance.