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Nvidia and SoftBank Agree on $40 Billion Sale of Chip Designer Arm

The SoftBank Group agreed to sell U.K.-based chip design company Arm Ltd. to Nvidia in a stock-and-cash deal valued at $40 billion, according to a Sunday Nvidia announcement.

The "definitive agreement" for Santa Clara, Calif.-based Nvidia to acquire Arm requires getting regulatory approvals first from the United Kingdom, the United States, China and the European Union. Altogether, it's estimated that the deal could take about 18 months to finalize, although it has already been approved by the boards of SoftBank, Nvidia and Arm.

Tokyo-based telco SoftBank had bought Arm Holdings, which provides designs for most of the chips used in mobile phones, for $32 billion about four years ago, although the "undertakings" are yet to be completed in "September 2021." The designs licensed by Arm get used by Nvidia to build its chips, and they are used by Nvidia's competitors, as well. Arm claims to have more than 1,000 technology partners using its licensed technologies.

Arm, if acquired by Nvidia, will continue Arm's research and development operations in Cambridge, U.K. Arm's open licensing model for chip designs also will continue, while adding Nvidia products, as well, the announcement indicated:

As part of NVIDIA, Arm will continue to operate its open-licensing model while maintaining the global customer neutrality that has been foundational to its success, with 180 billion chips shipped to-date by its licensees. Arm partners will also benefit from both companies' offerings, including NVIDIA's numerous innovations.

The deal was characterized by Nvidia as bringing together Nvidia's artificial intelligence (AI) computing platform with Arm's CPU designs to expand Nvidia's markets.

"Uniting NVIDIA's AI computing capabilities with the vast ecosystem of Arm's CPU, we can advance computing from the cloud, smartphones, PCs, self-driving cars and robotics, to edge IoT, and expand AI computing to every corner of the globe," said Jensen Huang, Nvidia's founder and CEO, in a released statement.

However, Arm co-founder Hermann Hauser objected to the deal in an open letter addressed to the U.K. prime minister. Hauser insisted that three conditions be made legally binding first, namely:

  1. Legally binding job guarantees for Arm employees in the UK.
  2. Legally binding agreement that Nvidia must not gain any preferential treatment over other Arm licensees.
  3. Britain must get an exemption from the US OFAC regulation so that UK companies are guaranteed unfettered access to our own microprocessor technology.

Hauser cautioned that if the deal goes through, then the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) will dictate where Arm's partners can sell their products, such as China. OFAC oversight, with the acquisition by Nvidia, would effectively diminish the United Kingdom's sovereignty, he argued.

"As the American president has weaponised technology dominance in his trade war with China, the UK will become collateral damage unless it has its own trade weapons to bargain with," Hauser wrote in the letter. "Arm powers the smartphones of Apple, Samsung, Sony, Huawei and practically every other brand in the world and therefore can exert influence on all of them."

Instead of a sale to Nvidia, Hauser proposed that Arm should go public on the London Stock Exchange.

About the Author

Kurt Mackie is senior news producer for 1105 Media's Converge360 group.

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