Nvidia Corp will buy UK-based chip designer Arm from Japan’s SoftBank Group Corp for as much as $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 U.S. chip company by market capitalisation.
Within hours of the announcement, critics questioned how Arm would maintain its open approach under U.S. ownership and at a time of friction with China.
For Softbank, the sale marks an early exit from Arm, just four years after the technology group’s $32 billion acquisition. Chief Executive Masayoshi Son has lionised the potential of Arm but is slashing his stakes in major assets to raise cash.
The move comes as SoftBank executives, frustrated at the group’s share performance, have held early stage talks about taking the Japanese technology group private, a source told Reuters. Those talks could gain momentum following the Arm sale. SoftBank’s shares soared 10% in Tokyo.
Nvidia will pay SoftBank $21.5 billion in shares and $12 billion in cash, including $2 billion on signing. The deal will see SoftBank and its $100 billion Vision Fund, which has a 25% stake in Arm, take a stake in Nvidia of between 6.7% and 8.1%.
Nvidia CEO Jensen Huang said the deal, which will boost his firm in data centre 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 emphasised 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.