Nvidia Buys Arm from SoftBank for $40 Billion

September 14, 2020 9:50 am

BEIJING (PingWest) — Silicon Valley chip maker Nvidia announced Sunday night that it had agreed to buy Arm Holdings, a chip designer for almost every smartphone, from iPhone to Android devices, from SoftBank Group Corp. for $40 billion. The deal will include $21.5 billion in Nvidia shares and $12 billion in cash, including $2 billion paid upon signature.

As part of Nvidia, Arm will continue to operate its open-licensing model while maintaining the global customer neutrality,” the statement said.

SoftBank acquired Arm in 2016 for $31.4 billion. The British company is best known for its architecture used in chips in most phones, including iPhone and Qualcomm chips used in Android devices. Apple is also planning to switch its Mac computers from Intel chips to Arm-based chips in the future.

SoftBank bought Arm as an investment in “Internet of Things”, but as the Japanese conglomerate has lost a tremendous amount of money on investments in companies like WeWork and Uber. Additionally, the company’s shares slumped so that it is looking for more cash to fund start-ups through its Vision Fund since many of them were heavily hit by the COVID-19 pandemic.

Nvidia CEO Jensen Huang told Forbes that the first thing that the combined company will do is to “bring Nvidia technology through Arm’s vast network.” However, it does not necessarily mean that Arm will change its current licensing model. ““Huang said Nvidia is spending a lot of money for the acquisition and has no incentive to do anything that would cause clients to walk away,” according to Bloomberg.