SoftBank has agreed to sell the UK-based Arm Holdings to US chipmaking company Nvidia for $40 billion, a statement released on Sunday confirmed.
As part of the acquisition – which represents the largest ever deal in the semiconductor industry – Nvidia will pay SoftBank $21.5 billion in stock and $12 billion in cash. A further $2 billion payment will be made upon signing, with the possibility of a further $5 billion payment in cash or stock if Arm’s performance reaches certain targets set by Nvidia.
Finally, an additional $1.5 billion in Nvidia stock will be paid to Arm employees. It is expected that SoftBank will own less than 10% of Nvidia once the transaction is completed, which may take as long as 18 months pending regulatory approval in the UK, the EU, China and the US.
If approved, the acquisition will transform Nvidia into a global influence in smartphone technology and cloud data centres, in addition to drastically expanding its already extensive portfolio of graphics chips.
Arm’s primary business is in licensing designs that other companies then turn into chips. Its licensees have shipped over 180 billion chips since its founding in 1990, and the company is becoming increasingly sought-after as Apple, Microsoft, Amazon and other major tech firms ramp up their use of ARM chips. The flexibility of ARM’s technology has turned them into a competitor for Intel’s widely-used chips.
Nvidia said that it will “continue to operate [Arm’s] open-licensing model and customer neutrality while maintaining the global customer neutrality that has been foundational to its success,” in a move to assuage the concerns of regulators and the company’s powerful customers. Nvidia will also add its own technology to those licensed by Arm.
Arm was also the subject of what was previously the largest deal in the semiconductor industry, when SoftBank purchased it in 2016 for $31.4 billion.
Simon Segars, chief executive of Arm, lauded the deal. “Arm and NVIDIA share a vision and passion that ubiquitous, energy-efficient computing will help address the world’s most pressing issues from climate change to healthcare, from agriculture to education,” he said in a statement.
SoftBank CEO Masayoshi Son also expressed confidence in the acquisition. “NVIDIA is the perfect partner for Arm,” he said. “Joining forces with a world leader in technology innovation creates new and exciting opportunities for Arm.”
“This is a compelling combination that projects Arm, Cambridge and the UK to the forefront of some of the most exciting technological innovations of our time and is why SoftBank is excited to invest in Arm’s long-term success as a major shareholder in NVIDIA.”