UK based chip designer ARM Holdings to be acquired by Nvidia for $40 billion

UK based chip designer ARM, which is currently owned by Japanese conglomerate Softbank, is now going to be sold to US based Nvidia Corp. Softbank acquired ARM for $32 billion in 2016 and now after four years Nvidia will pay Softbank $21.5 billion in its own stock and $12 billion in cash. This will be followed with up to a further $5 billion in cash or stock depending upon the ARM’s business performance. Nvidia will also pay $1.5 billion in equity to ARM’s employees. Thus the consideration of $40 billion to be met through a combination of NVIDIA shares and cash

“ARM will remain headquartered in Cambridge,” said Nvidia’s chief executive Jensen Huang.

“We will expand on this great site and build a world-class AI research facility, supporting developments in healthcare, life sciences, robotics, self-driving cars and other fields.” he added.

ARM does not make chips but instead has created an instruction set architecture which defines how software controls processors. ARM creates computer chip designs that others then customise to their own ends. ARM licenses its chip designs and technology to companies such as Apple, Samsung, Huawei, Qualcomm and many other chip manufacturers. To date, ARM says 180 billion chips have been made based on its solutions.

Nvidia on the other hand specializes in high-end graphics processing units (GPUs) commonly used by gamers and by scientific professionals. Nvidia is also one of ARM’s clients and produces its own line-up of Tegra CPUs. In July, Nvidia overtook Intel to become the world’s most valuable chipmaker. This deal will make Nvidia enter into competition facing rivals such as Intel Corporation and Advanced Micro Devices (AMD).