Nvidia has announced that it has reached an agreement with the SoftBank Group to buy the British chip designer ARM for $40 billion (‘33.75 billion). The company says that ARM will operate as a division of Nvidia, maintain its headquarters in Cambridge, UK, and “continue to operate its open licensing model while maintaining its neutrality with customers. The acquisition is subject to regulatory approval.
The transaction, which has already been approved by the three boards of directors, will be financed through equity and cash. The agreement contemplates that Nvidia will pay $21.5 billion in shares and $12 billion in cash. In addition, $2 billion will be paid upon signature and the final $5 billion is subject to a number of financial targets to be met by ARM. Upon completion of the transaction, SoftBank will have a stake in Nvidia that is expected to be less than 10%.
“Nvidia is the perfect partner for ARM,” said Masayoshi Son, president and CEO of SoftBank. In addition, the Japanese company says it is committed to the long-term success of ARM through its participation in Nvidia.
“In the years to come, billions of computers with Artificial Intelligence (AI) will create a new Internet of things that is thousands of times larger than the Internet of people today,” says Jensen Huang, CEO and founder of Nvidia. “This combination has huge benefits for both companies, our customers and the industry. Huang is committed to expanding ARM’s UK headquarters, turning Cambridge into a world-class technology center and building an ARM processor-powered supercomputer”.
Due to the complexity of the deal and the multiple countries involved, the purchase is expected to take a year and a half to close. During this time the deal will have to pass the approval of regulators and antitrust agencies in the United States, United Kingdom, China and the European Union.
ARM is a chip designer whose intellectual property powers the mobile device processors of multiple companies, including Apple, Samsung and Qualcomm. Nvidia is the leading manufacturer of GPUs, one of the main players in the Artificial Intelligence sector and the responsible for Tegra, mobile chips that use ARM designs and that are currently found in Nintendo Switch.