Nvidia makes moves to buy Arm Holdings from SoftBank

On Sunday night, SoftBank and Nvidia announced an acquisition deal which will allow Nvidia to buy Arms Holding at $40 billion.

Funds for the deal will be made available in two forms: $21.5 billion in Nvidia stock and $12 billion in cash, alongside $2 billion payable signings. According to Nvidia, the deal is expected to take up to a year to close.

Arm is one of the leading chip designers for mobile phones and has worked with big-name tech companies like Apple, designing chips for iPhones and Mac computers. Arm is also the designer of the Qualcomm chips found in most Android phones.

This acquisition will put Nvidia in the leading position amongst its competitors as Arm already has a strong client base. Nvidia’s chips are also widely recognized and used in artificial intelligence and graphics applications, including those used in self-driving cars and other smart gadgets.

“The combination makes financial sense, and it’s a great deal for SoftBank and us,” said Nvidia CEO Jensen Huang in a Monday press call.

Nvidia has pledged not to put a stop to Arm’s “open-licensing model and customer neutrality”. The company added that Arm’s business operations will continue in the United Kingdom.

In 2016, SoftBank acquired mobile phones chip designer, Arm for $31.4 billion, adding it to one of the company’s largest acquisitions ever made. At the time, SoftBank made the purchase with a goal of investing in the NextGen Internet of Things (IoT). About Arm, SoftBank Chairman Masayoshi Son said the company was a company that he had “always admired for the last 10 years” and it was a company he wanted to make part of SoftBank.

Four years after purchasing Arm, SoftBank is ready to sell its Arm investment after the company’s finances weakened this year. The company also lost some money on investments in other companies like Uber and WeWork, this year. In addition, shares of SoftBank depreciated after it was reportedly stated that its large stake investments in some tech giants which affected its stock market value.

On the other hand, Nvidia seems to be topping its game as its video games saw a sharp increase in demand due to stay home and social distancing orders of the pandemic. The company has also announced that it will launch a new graphics card for PCs which will boost the user experience PC gamers. With all of these in view, Nvidia projects roughly a 46% growth in revenue for its next quarter.