SoftBank selling Arm to Nvidia for up to $40 billion

Nvidia Corp will buy UK-based chip designer Arm from Japan’s SoftBank Group Corp for as much as US$40 billion, the companies said on Monday, in a deal set to reshape the global semiconductor landscape.

The sale puts a vital supplier to Apple Inc and others across the industry under the control of a single player and faces likely pushback from regulators and rivals to Nvidia, the biggest US chip company by market capitalization.

Within hours of the announcement, critics questioned how Arm would maintain its open approach under US ownership.

For Softbank, the sale marks an early exit from Arm, just four years after the technology group’s US$32 billion acquisition. Chief Executive Masayoshi Son has lionized the potential of Arm but is slashing his stakes in major assets to raise cash.

Nvidia will pay SoftBank US$21.5 billion in shares and US$12 billion in cash, including US$2 billion on signing. The deal will see SoftBank and its US$100 billion Vision Fund, which has a 25 percent stake in Arm, take a stake in Nvidia of between 6.7 percent and 8.1 percent.

SoftBank could be paid an additional US$5 billion in cash or shares depending on the chip designer’s business performance, with Arm employees to be paid US$1.5 billion in Nvidia shares. The Arm deal is expected to close by March 2022.

Nvidia CEO Jensen Huang, who has a penchant for leather jackets and an Nvidia arm tattoo, said the deal, which will boost his firm in data center chips, was “pro competition.” It marked “the first time in history the industry could see something that is genuinely alternative” to Intel Corp’s domination of the sector, he said.

Taiwan-born Huang emphasized he will retain Arm’s neutral licensing model and expand it by licensing out Nvidia intellectual property for the first time.

Nvidia said it will license its flagship graphical processor unit through Arm’s network of silicon partners.

It will build chips for devices like self-driving cars but also make its technology available for others.

The companies did not discuss the deal with the British government until shortly before the announcement because the talks were secret, Huang said. A new artificial intelligence research center will be built at Arm’s Cambridge headquarters.

The purchase, which is subject to regulatory approvals including in Britain, the United States and China, is likely to come under close scrutiny in China, where thousands of companies from Huawei to small startups use Arm technology.

Arm does not make chips but has created an instruction set architecture, the most fundamental intellectual property that underpins computing chips, on which it bases designs for computing cores. Arm licenses its chip designs and technology to customers like Qualcomm Inc, Apple and Samsung Electronics Co Ltd. Apple’s forthcoming Mac computers will use Arm-based chips.

Arm will not become subject to US export controls under the deal, said Huang.