Nvidia is Buying ARM from SoftBank for $40 Billion

Kevin Gabeci
Kevin Gabeci
3 Min Read

The previous rumors about this situation have been correct since now Nvidia has confirmed its intentions of buying the processor architecture company ARM. The purchase of ARM Holdings from the current owner, which is SoftBank, will be valued at $40 Billion. The boards of directors from NVIDIA, Arm, and SBG approved the acquisition, which is going to be accretive to NVIDIA’s non-GAAP earnings per share and non-GAAP gross margin.

  • Unites NVIDIA’s leadership in artificial intelligence with Arm’s vast computing ecosystem to drive innovation for all customers.
  • NVIDIA will expand Arm’s R&D presence in Cambridge, UK, by establishing a world-class AI research and education center, and building an Arm/NVIDIA-powered AI supercomputer for groundbreaking research.
  • NVIDIA will continue Arm’s open-licensing model and customer neutrality and expand Arm’s IP licensing portfolio with NVIDIA technology.
  • Immediately accretive to NVIDIA’s non-GAAP gross margin and EPS.
  • Consideration of $40 billion to be met through a combination of NVIDIA shares and cash.

How will the deal finalize?

That is a significant acquisition, and Nvidia will complete the deal in a mixed way, not only cash. They will offer $21.5 billion in Nvidia common stock and $12 billion in cash that will include a $2 billion payable when signing the contract. They will also need to pay $1.5 billion in equity to Arm employees and may pay up to $5 billion in common stock or cash through an earn-out construct, subject to Arm’s satisfaction of financial performance targets. The deal is subject to regulatory approvals in the U.S, U.K, European Union, and China. This purchase is going to close in about 18 months or early 2020.

The future.

“Uniting NVIDIA’s AI computing capabilities with the vast ecosystem of Arm’s CPU, we can advance computing from the cloud, smartphones, PCs, self-driving cars and robotics, to edge IoT, and expand AI computing to every corner of the globe,” said Jensen Huang, founder, and CEO of Nvidia.

Huang also added that they wouldn’t restructure the whole new company, but instead, they will let them run where they are located. The main offices will continue to be in Cambridge, England, and Nvidia will open a new AI research department at the Cambridge campus and will use Arm-built CPUs to build an AI Supercomputer. The future of supercomputers is looking bright with the new powerful arm processors, and all we can do now is wait for the best results.

The CEO of Arm will join Nvidia, along with his management team. They plan to use balance sheet cash to fund the deal’s cash portion, which does not include the IoT services group of Arm, which will maintain its open-licensing model and global customer neutrality.

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