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On September 13, 2020, NVIDIA announced it had signed a definitive agreement to acquire Arm Holdings from SoftBank for $40 billion in a combination of NVIDIA stock and cash. SoftBank will retain a 10% interest in Arm. While there are regulatory issues to be resolved in the UK, the US and China, NVIDIA anticipates this process will take 12 to 18 months. The process of integrating the two companies will not start until the deal is consummated.

The Basics of the Acquisition

• NVIDIA will retain Arm’s company headquarters in Cambridge, UK, and will expand Arm’s presence in Cambridge by establishing an AI research and education center in the UK.
• NVIDIA will retain Arm’s current business model for licensing Semiconductor Intellectual Property (SIP).
  • NVIDIA intends to continue to invest in Arm’s Mali Graphics GPU technology, as well as all the other Arm SIP product types.
  • NVIDIA plans to use Arm’s experience to license NVIDIA’s GPU designs as SIP.
  • NVIDIA intends to continue to use RISC-V CPU SIP internally.
• NVIDIA will continue to honor the agreement between SoftBank and the British government to keep Arm’s headquarters in the UK and to increase headcount in their UK locations.

Industry Thoughts Regarding the Acquisition

There has been much speculation about the possible sale of Arm ever since SoftBank signaled last year their intention to either IPO Arm or sell it outright. Many articles have been written that were both for and against this transaction. Companies rumored to be interested included Intel, AMD, Qualcomm, Samsung, Amazon, Google, Microsoft, Facebook and even Netflix were possible suspects for such an acquisition. The reasoning was that their purchase of ARM would lead to a ‘custom’ architecture that would give them a competitive lead in the data center and the emerging AI market. Apple was also mentioned as a potential buyer given that they are already replacing Intel in their desktop and laptop PC products with their own custom architecture. Why not purchase Arm and start to enter the data center as a new market for Apple?

As it turns out, none of these opinions focused on what the real motives for this acquisition were: Arm is the pre-eminent SIP company, and any analysis about the acquisition needed to take this into account as a very important point and not an afterthought!

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