Nvidia takes over ARM for 40 billion US dollars
Nvidia acquires ARM for 40 billion US dollars from the Japanese telecommunications and media group SoftBank. This makes the deal the largest acquisition of semiconductor technology in history and the second largest tech takeover ever after Dell's 64 billion EMC deal.
With the deal, Nvidia will further consolidate its position as the most valuable US chip manufacturer - even ahead of Intel. There has been talk for months that Nvidia will take over SoftBank's shares in ARM. Now the deal has been finalised. The 40 billion dollars on the price tag is mainly made up of ordinary shares in Nvidia. As a result, SoftBank will continue to have an influence on ARM's development. However, this influence will be very small. According to the announcement, it amounts to less than 10 per cent.
The deal still has to be approved by the authorities. It could therefore take up to 18 months before the takeover is finalised.
The details of the deal
Nvidia will pay SoftBank a total of 21.5 billion US dollars in Nvidia ordinary shares and 12 billion US dollars. An additional 2 billion US dollars will be due upon signing. If certain financial performance is achieved, SoftBank could receive an additional $5 billion in cash or common stock. In addition, Nvidia will issue $1.5 billion in shares to ARM employees. This is a measure to retain employees in the company. SoftBank is thus assured of 33.5 billion US dollars. The company only acquired ARM for 31.4 billion in 2016.
The deal does not include ARM's IoT Services Group, which will remain with SoftBank.
This is what is to become of ARM
As a reminder, ARM designs silicon chips and licences instruction sets that define how the chips communicate. In addition, ARM's intellectual property - including Reduced Instruction Set Computing (RISC) and Instruction Set Architecture (ISA) - is used by Apple, Qualcomm and Samsung for their smartphone chips. This corresponds to a market coverage of around 90 per cent.
Nvidia wants to continue to adhere to ARM's open licence model and customer neutrality. At the same time, ARM's IP licence portfolio - i.e. its intellectual property - is to be expanded with Nvidia's GPU and AI technology. According to the press release, ARM licensees have already delivered over 180 billion chips based on the ARM architecture - 22 billion of which were delivered last year alone.
The intellectual property of ARM will remain registered in the UK. ARM's name and brand identity will also be retained. As will the headquarters in Cambridge. The research and development department there is to be expanded with a new AI research and training centre, including an ARM/Nvidia-supported AI supercomputer for research.
What does the deal mean for Nvidia?
Nvidia primarily gains access to the expertise of ARM's IP and engineering specialists with the acquisition. This will enable the company to quickly develop customised CPU architectures for its own use. It will thus expand in the financially lucrative data centre sector. With the recent introduction of CUDA support for the ARM architecture, Nvidia has already paved the way for integration. Now the company also has control of the underlying ARM ISA. This enables the tight integration of both solutions.
Nvidia recently acquired Mellanox and Cumulus Networks for $6.9 billion. The companies specialise in network solutions. The company also recently acquired SwiftStack, a company that specialises in data storage software for AI and HPC computing.
All these acquisitions - including the 40 billion ARM deal - should make Nvidia an important, if not the most important player in data centres in the future.
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