Nvidia to acquire Arm for $40bn, promises to keep its licensing business alive

UK to remain HQ as combined companies eye off cloud-to-edge AI stack

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Nvidia has announced it will buy UK chip-designer Arm.

A Monday statement from Nvidia and Arm’s current owner SoftBank says the transaction will be valued at $40bn. Nvidia is not buying Arm's Internet-of-Things services, we note.

Arm will remain headquartered in the UK and its brand and business model will persist. Arm, which operated from an 'any core for any buyer' Switzerland-like neutral position in the industry, has effectively been bought by one of its customers, a move that is sending tremors through the semiconductor world.

There is overlap between Arm and Nvidia: both design graphics processors and machine-learning accelerators, though Arm aims these blocks of technology at battery-powered mobile devices primarily, whereas Nvidia sets its sights mainly on desktop rigs, workstations, and servers. Anything could happen in the next year in the Arm and Nvidia GPU space now.

Nvidia founder and CEO Jensen Huang penned a letter about the deal in which he said: “Arm’s business model is brilliant. We will maintain its open-licensing model and customer neutrality, serving customers in any industry, across the world, and further expand Arm’s IP licensing portfolio with Nvidia’s world-leading GPU and AI technology.”

Huang’s letter explained that Nvidia wants to extend its AI tech to wherever Arm-powered devices can be found. It also seems Nv is mostly keen on welding Arm's CPU cores to its own graphics and machine-learning compute engines.

AI “will expand computing to every corner of the globe. Someday, trillions of computers running AI will create a new internet — the internet-of-things — thousands of times bigger than today’s internet-of-people,” Huang said. “Uniting Nvidia’s AI computing with the vast reach of Arm’s CPU, we will engage the giant AI opportunity ahead and advance computing from the cloud, smartphones, PCs, self-driving cars, robotics, 5G, and IoT.”

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“Our R&D scale will turbocharge Arm’s roadmap pace and accelerates data center, edge AI, and IoT opportunities,” Huang added.

Which sounds a lot like Nvidia intends to build itself a cloud-to-edge AI-friendly stack, an ambitious undertaking if ever there was one!

Just $12bn of the $40bn headline price that will be cash for SoftBank, though the Japanese company will also score $21.5bn in Nvidia common stock – a sub-ten-percent stake. SoftBank can also earn $5bn more cash “subject to satisfaction of specific financial performance targets by Arm.” Arm employees will share $1.5bn in equity, which may be a handy incentive to keep its engineers and other staff on the payroll for a few more years.

Those in the UK will also have a shiny new “world-class AI research center in Cambridge” as a possible workplace.

“This Nvidia research center will be the home of a state-of-the-art AI supercomputer powered by Arm CPUs” and “will be a major attraction for scientists from around the world doing groundbreaking research in healthcare, life sciences, robotics, self-driving cars, and other fields,” Huang wrote. The new centre will also become Nvidia’s Euro-HQ “to collaborate with universities, industrial partners, and startups. It will also be the Nvidia Deep Learning Institute for Europe, where we teach the methods of applying this marvelous AI technology.”

Arm CEO Simon Segars put his name to canned quotes that stated: "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 added: “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.”

Don’t hold your breath waiting for ribbon-cuttings because SoftBank and Nvidia say the deal will take 18 months to close. Regulators will need to sign off on it, too.

SoftBank acquired Arm for $31bn in 2016. The direct consideration it will receive for the sale – $12bn in cash and $21.5bn in stocks, don't forget – represents an eight percent gain over four years during which major stock exchange indices have close to doubled. ®

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