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Nvidia buys ARM for $40 billion in deal that could change the tech world forever

Nvidia buys ARM
(Image credit: Nvidia)

Nvidia has officially confirmed it is acquiring ARM from SoftBank for $40 billion.

“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,” said Simon Segars, CEO of Arm.

“Delivering on this vision requires new approaches to hardware and software and a long-term commitment to research and development. By bringing together the technical strengths of our two companies we can accelerate our progress and create new solutions that will enable a global ecosystem of innovators. My management team and I are excited to be joining NVIDIA so we can write this next chapter together.”

Nvidia ARM

Nvidia will initially pay SoftBank $12 billion in cash and $21.5 billion in Nvidia shares, with further cash or stock (up to $5 billion) to be paid going forward under an earn-out scheme which stipulates certain financial targets to be achieved by ARM. Staff at ARM will also benefit from the issue of some $1.5 billion in equity.

As ever, the proposed deal is subject to regulatory approval, and some have already been casting doubts about how problematic that may still be.

ARM will be a division of Nvidia and will “continue to operate its open-licensing model while maintaining the global customer neutrality that has been foundational to its success”, Nvidia promised in a statement detailing the buyout.

Nvidia also made a commitment to ARM staying headquartered in the UK, with its intellectual property remaining registered in the UK. The company made a further promise to build on ARM’s UK facilities by introducing a “global center of excellence in AI research” at the Cambridge campus.

Nvidia’s CEO Jensen Huang enthused: “AI is the most powerful technology force of our time and has launched a new wave of computing. In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people. Our combination will create a company fabulously positioned for the age of AI.”

Opposing forces?

Certainly Nvidia is emphasizing that it’s not going to change the way ARM works, broadly speaking. That’s not really surprising, however, as some of ARM’s big clients could conceivably be rethinking their position given the acquisition (and there’s a political dimension to the buyout, too, given the likely reaction from China, in terms of ARM ownership transferring to a US company).

As analyst Geoff Blaber from CCS Insight notes: “This will face big opposition not least from ARM licensees.” Blaber also observed that it’s “very difficult to see how Nvidia can balance its own requirements with that of the ARM ecosystem.”

Clearly, this is a huge acquisition and a potentially big shift in power within the tech industry, with a lot of eyes on how it plays out – assuming the aforementioned regulatory go-ahead is given, naturally.