Nvidia Plans to Buy Chip Designer ARM Ltd.

Nvidia (NVDA) has announced its intention to buy chip designer ARM Ltd. from Softbank. Based on the reports that came in from Bloomberg News, there is a possibility of the deal reaching a conclusion within the next few weeks as Nvidia is the only company making moves to purchase ARM.

In 2016, Softbank acquired ARM for the sum of $31.4 billion. Now, the company is looking to sell Arm to the most beneficial bidder. Of late, Softbank has been laying off some of its biggest assets to pay down the Japanese investment fund’s debt which includes part of its stake in big companies like Alibaba (BABA) and T-Mobile.

The deal between Nvidia and Softbank could be the largest ever in the history of the semiconductor industry.

Softbank plans to drop part or all of its stake in ARM either through a sale or public listing, according to a Bloomberg report. If the deal with Nvidia or any other interested bidder that pops up, doesn’t work out, a public listing would be the next step for Softbank and it could happen as soon as next year.

ARM is a chip designer that powers major mobile processors from big companies like Samsung, Apple, Qualcomm, and Huawei. Since Softbank purchased ARM in 2016, the company has only grown in value as its designs have become greatly essential to both Android and iOS devices. Microsoft has an ARM-based Surface and a version of the Windows designed specifically for ARM. Recently, Apple also announced that its Mac computers will be making use of ARM-based chipsets to spearhead the next boon for the company.

Although, the deal may likely attract intense scrutiny from regulators as Nvidia is also a customer of ARM, which may put the company at a competitive advantage over other companies that rely on ARM’s chip designs.

If the deal is finalized, Nvidia would be the perfect fit for ARM, since Nvidia is a leader for GPUs which ARMs designs as well. Buying ARM would give Nvidia the opportunity to expand its reach in the computing world.  

Earlier in July, Nvidia’s market cap exceeded that of Intel for the first time ever. In the same month, Nvidia was upgraded at Cowen, which also affirmed the company’s rating, raising its price target to $475 from $410.