Nvidia has reached an agreement with investor Softbank on the acquisition of ARM. The deal is worth 40 billion U.S. dollars (33.7 billion euros).
With ARM, Nvidia wants to strengthen its focus on artificial intelligence (AI). Jensen Huang, the CEO of Nvidia, talks about a combined company that is well-positioned for the AI era. “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”, said the CEO.
With the announcement, Nvidia promises to maintain the open licensing model and the neutrality of ARM. ARM builds the basic architecture chip design for many processors, and then licenses them out. Apple, for example, uses these designs for creating processors for iPhones and iPads, while in the future it also wants to install ARM-based processors in Macs. Qualcomm and Samsung also build ARM-based processors for smartphones.
The promise to maintain this model should also satisfy the authorities that have to approve the acquisition. Among others, authorities from the European Union, the United States, China and the United Kingdom will have to approve the deal. Nvidia expects the completion of the acquisition to take about 18 months.
Nvidia and Softbank agreed on a payment construction that is divided into parts. Nvidia pays 21.5 billion dollars in shares and 12 billion dollars in cash in advance. If ARM meets certain performance expectations, an additional $5 billion is paid, while $1.5 billion is paid to ARM employees in Nvidia shares.
In 2016, Softbank acquired ARM. At that time, the investor paid 31.4 billion dollars for the chip designer.