ARMS to Nvidia for $40Billion

 

M&A It Takes an Army Francis Scialabba The speculation was true. In the biggest chip deal ever, SoftBank has agreed to sell UK-based Arm Holdings to Nvidia for $40 billion in cash and stock. The B2B deal is likely more consequential than the TikTok spectacle hogging the limelight.  Even so, regulators won’t be rubber-stamping this tie-up. Nvidia expects the nuptials in ~18 months.  In newsletter terms, that’s light-years away And Arm’s own cofounder, Hermann Hauser, wants to stop the deal. In an open letter to PM Boris Johnson, Hauser said a Nvidia takeover could damage the UK tech sector and nullify Arm’s neutrality.  Neutrality? Arm designs chip blueprints and licenses them to 500+ companies, making it the Switzerland of semiconductors. Nvidia says it will honor Arm’s customer neutrality and open-licensing model.  What’s in it for Nvidia?  Explicit: “We are joining arms with Arm [haha] to create the leading computing company for the age of AI,” Nvidia CEO Jensen Huang wrote to employees [parenthetical mine]. Huang mentioned “AI” 14 times in the memo and said Nvidia will break ground on a “world-class AI research center” in Cambridge, Arm’s HQ.   The combined R&D teams will turbocharge Nvidia’s data center, edge AI, and IoT business lines, per Huang.  Reading between those lines: Nvidia was a huge winner of the machine learning renaissance. It already has a robust data center business. Arm was recently eyeing a spinout for its IoT business to focus on mobile chip design, its core competency.  Mobile was likely a clincher for Nvidia, even though the company didn’t say so. Arm’s blueprints are in nearly every phone in the world. Nvidia may have steered clear of discussing that due to antsy-trust concerns and antsy Arm customers/Nvidia competitors.  Zoom out: The proposed sale would give Washington more leverage over origin technology. China is a key market for Arm, and regulators there could scuttle the deal or extract tech transfer concessions. RISC-V, a fledgling open-source chip design effort, may also rake in more investment and club members.