Published: Tue, September 15, 2020
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ARM founder: $40bn sale of United Kingdom chipmaker to Nvidia 'disaster'

ARM founder: $40bn sale of United Kingdom chipmaker to Nvidia 'disaster'

US graphics chip maker Nvidia said it plans to buy UK-based Arm Holdings in a deal worth up to $40 billion, in a move that would create a global powerhouse in the industry.

NVIDIA will also issue $1.5 billion in equity to Arm employees. Nvidia and Softbank announced today that they have reached a final agreement on the acquisition of ARM. NVIDIA said Arm will continue to "operate its open-licensing model while maintaining the global customer neutrality that has been foundational to its success" while also working together with NVIDIA moving forward.

NVIDIA CEO Jensen Huang noted this deal has helped create a partnership that will push the limits of what computers and the internet are capable of.

"We are joining arms with Arm to create the leading computing company for the age of AI". First, Arm will remain headquartered in Cambridge, and NVIDIA will build a world-class AI research and education center supporting developments in healthcare, life sciences, robotics, self-driving cars, and other fields.

Under the deal, SoftBank will get $12 billion in cash from Nvidia, as well as over 44 million shares in the company valued at $21.5 billion.

The cash pile is a significant achievement for SoftBank, which half a year ago was struggling with a stock price in free fall and billions of dollars in write-downs on investments that turned sour, such as in USA office-share company WeWork. Some of those trades, involving the purchase of options that confer the right to buy stocks at a later date, have been so big that they contributed to a surge in US markets.

"It's a disaster for Cambridge, the United Kingdom and Europe", Hermann Hauser told Reuters in an interview, referring to Arm's base in eastern England. Regulatory approval may take as long as 18 months before the transaction is completed and the deal needs sign-offs from U.K., China, the European Union and the US, the companies said.In a move to placate Arm's powerful customers and defuse regulatory concerns, Nvidia said the U.K. company will "continue to operate its open-licensing model while maintaining the global customer neutrality that has been foundational to its success".

NVIDIA's acquisition of Arm closed for $40 billion yesterday, sending shockwaves across the industry. There's already tremendous uncertainty about what this deal might mean for competition long-term, and whether Nvidia will seek to exploit its ownership of the ARM IP to its own unique benefit in a way that is harmful to the ISA's current licensees.

Arm has developed energy-efficient processor designs that have enabled 180 billion chips to perform intelligent computing calculations.

As part of the deal, SoftBank reversed an earlier plan in which it would have kept ARM's IoT business for itself.

The companies say it will likely take about a year and a half for the acquisition to be completed, because, among other things, it will need to be approved by regulators in the UK, US, China, and the European Union. I'd not be surprised if the deal is killed sometimes in 2021, as we've seen in the past with Qualcomm trying to acquire NXP.

Nvidia is also one of ARM's clients, using its designs to create its line-up of Tegra computer processing units (CPUs).

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