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NVIDIA to Acquire Arm for $40 Billion!

Daniel Nenni

Admin
Staff member
NVIDIA to Acquire Arm for $40 Billion, Creating World’s Premier Computing Company for the Age of AI

Sunday, September 13, 2020
NVIDIA to Acquire Arm for $40 Billion, Creating World’s Premier Computing Company for the Age of AI
  • 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
NVIDIA and SoftBank Group Corp. (SBG) today announced a definitive agreement under which NVIDIA will acquire Arm Limited from SBG and the SoftBank Vision Fund (together, “SoftBank”) in a transaction valued at $40 billion. The transaction is expected to be immediately accretive to NVIDIA’s non-GAAP gross margin and non-GAAP earnings per share.

The combination brings together NVIDIA’s leading AI computing platform with Arm’s vast ecosystem to create the premier computing company for the age of artificial intelligence, accelerating innovation while expanding into large, high-growth markets. SoftBank will remain committed to Arm’s long-term success through its ownership stake in NVIDIA, expected to be under 10 percent.

“AI is the most powerful technology force of our time and has launched a new wave of computing,” said Jensen Huang, founder and CEO of NVIDIA. “In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people. Our combination will create a company fabulously positioned for the age of AI.

“Simon Segars and his team at Arm have built an extraordinary company that is contributing to nearly every technology market in the world. 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.

“This combination has tremendous benefits for both companies, our customers, and the industry. For Arm’s ecosystem, the combination will turbocharge Arm’s R&D capacity and expand its IP portfolio with NVIDIA’s world-leading GPU and AI technology.

“Arm will remain headquartered in Cambridge. 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. And, to attract researchers and scientists from the U.K. and around the world to conduct groundbreaking work, NVIDIA will build a state-of-the-art AI supercomputer, powered by Arm CPUs. Arm Cambridge will be a world-class technology center.”

“NVIDIA is the perfect partner for Arm,” said Masayoshi Son, chairman and CEO of SBG. “Since acquiring Arm, we have honored our commitments and invested heavily in people, technology and R&D, thereby expanding the business into new areas with high growth potential. Joining forces with a world leader in technology innovation creates new and exciting opportunities for Arm. This is a compelling combination that projects Arm, Cambridge and the U.K. to the forefront of some of the most exciting technological innovations of our time and is why SoftBank is excited to invest in Arm’s long-term success as a major shareholder in NVIDIA. We look forward to supporting the continued success of the combined business.”

“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,” said Simon Segars, CEO of Arm. “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.”

Commitment to Arm and the UK
As part of NVIDIA, Arm will continue to operate its open-licensing model while maintaining the global customer neutrality that has been foundational to its success, with 180 billion chips shipped to-date by its licensees. Arm partners will also benefit from both companies’ offerings, including NVIDIA’s numerous innovations.

SoftBank and Arm are fully committed to satisfying the undertakings made by SoftBank when it acquired Arm in 2016, which are scheduled to complete in September 2021. Following the closing of the transaction, NVIDIA intends to retain the name and strong brand identity of Arm and expand its base in Cambridge. Arm’s intellectual property will remain registered in the U.K.

NVIDIA will build on Arm’s R&D presence in the U.K., establishing a new global center of excellence in AI research at Arm’s Cambridge campus. NVIDIA will invest in a state-of-the-art, Arm-powered AI supercomputer, training facilities for developers and a startup incubator, which will attract world-class research talent and create a platform for innovation and industry partnerships in fields such as healthcare, robotics and self-driving cars.

Additional Transaction Details
Under the terms of the transaction, which has been approved by the boards of directors of NVIDIA, SBG and Arm, NVIDIA will pay to SoftBank a total of $21.5 billion in NVIDIA common stock and $12 billion in cash, which includes $2 billion payable at signing. The number of NVIDIA shares to be issued at closing is 44.3 million, determined using the average closing price of NVIDIA common stock for the last 30 trading days. Additionally, SoftBank may receive up to $5 billion in cash or common stock under an earn-out construct, subject to satisfaction of specific financial performance targets by Arm.

NVIDIA will also issue $1.5 billion in equity to Arm employees.

NVIDIA intends to finance the cash portion of the transaction with balance sheet cash. The transaction does not include Arm’s IoT Services Group.
The proposed transaction is subject to customary closing conditions, including the receipt of regulatory approvals for the U.K., China, the European Union and the United States. Completion of the transaction is expected to take place in approximately 18 months.

Conference Call and Webcast Details
NVIDIA will conduct a webcast at 5:30 a.m. PT on Monday, September 14, to discuss the transaction. The webcast is available on NVIDIA’s Investor Relations website at https://investor.nvidia.com/. A webcast replay and a copy of the webcast presentation materials will also be available at https://investor.nvidia.com/.

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FAQ - NVIDIA to Acquire Arm

About SoftBank
The SoftBank Group invests in breakthrough technology to improve people’s quality of life around the world. The SoftBank Group is comprised of SoftBank Group Corp. (TOKYO: 9984), a holding company that includes telecommunications, internet services, AI, smart robotics, IoT and clean energy technology providers; Arm Limited, the world’s leading semiconductor IP company; and the SoftBank Vision Fund, which is investing up to $100 billion to help extraordinary entrepreneurs transform industries and shape new ones. To learn more, please visit https://global.softbank.

About Arm
Arm technology is at the heart of a computing and data revolution that is transforming the way people live and businesses operate. Our advanced, energy-efficient processor designs have enabled intelligent computing in 180 billion chips and our technologies now securely power products from the sensor to the smartphone and the supercomputer. In combination with our IoT device, connectivity and data management platform, we are also enabling customers with powerful and actionable business insights that are generating new value from their connected devices and data. Together with 1,000+ technology partners we are at the forefront of designing, securing and managing all areas of compute from the chip to the cloud.

About NVIDIA
NVIDIA’s (NASDAQ: NVDA) invention of the GPU in 1999 sparked the growth of the PC gaming market, redefined modern computer graphics and revolutionized parallel computing. More recently, GPU deep learning ignited modern AI — the next era of computing — with the GPU acting as the brain of computers, robots and self-driving cars that can perceive and understand the world. More information at http://nvidianews.nvidia.com/.
 
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prime007

Member
From TechCrunch:
Owing to the complex ownership structure and the multiple countries involved, closing is expect to take one and a half years, and will require regulatory and antitrust approvals in the U.S., the United Kingdom where Arm is headquartered, China, and the European Union
techcrunch
You have to really wonder about the odds for regulatory approval. I would expect STRONG resistance from the U.S. (especially coming from Intel, AMD, Qualcomm and maybe Apple?) and the European Union (not particularly fond of losing local companies to foreign ownership). I'd expect China to DEMAND perpetual access to ARM licenses/designs for Chinese companies...something that isn't even under nVidia/ARM's ability to agree to. I think most people would view nVidia's purchase as a BAD thing for ARM's future. nVidia is a competitor to many ARM licensees and nVidia's purchase of ARM will probably result in many of them seeking an alternative (RISC-V?).
 

Daniel Nenni

Admin
Staff member
Probably the biggest semiconductor news of the year, absolutely.

I'm sure the question of China and big Arm customers like Apple, QCOM, Samsung, etc... will come up in the Q&A. This seems like a long shot but I would not bet against Nvidia, ever.

From TechCrunch:
You have to really wonder about the odds for regulatory approval. I would expect STRONG resistance from the U.S. (especially coming from Intel, AMD, Qualcomm and maybe Apple?) and the European Union (not particularly fond of losing local companies to foreign ownership). I'd expect China to DEMAND perpetual access to ARM licenses/designs for Chinese companies...something that isn't even under nVidia/ARM's ability to agree to. I think most people would view nVidia's purchase as a BAD thing for ARM's future. nVidia is a competitor to many ARM licensees and nVidia's purchase of ARM will probably result in many of them seeking an alternative (RISC-V?).
 

Portland

Member
I read that existing customers will still be entitled to access of ip.

That nvidia will focus on data centers.

That it's a done deal.

Not a big fan of the acquisition because it will create barriers for new customers and innovators and we really don't know how cooperative nvidia will be with existing customers. Really customers like apple will take a backseat to nvidia's interests.
 

f4rewell1

Member
Why nvidia just didn’t buy nuvia for a lot less money and without any regulatory concerns. And also Apple and nvidia have had really big conflict(s) -that still continues I think-. Considering Apple’s “ Intel x86” to “Apple Silicon”(ARM) move, this conflict(s) will probably cause much bigger consequences for Apple. So expect Apple recruit ARM’s top talents (in case it will not be able to block this deal). I really, REALLY HOPE that this deal will NOT HAPPENS.
 

f4rewell1

Member
This deal (merger) only, ONLY serves for nvidia’s interests I think; from now on nvidia will be free from has to interoperate within the Wintel ecosystem. It now can create it’s own ecosystem with ARM instead of x86. But I really wonder, from now on will Apple be able to go on it’s own way with adding own IP to the existing ARM IP it has been using; after all it has made the switch from intel x86 to “Apple Silicon” partly because to differentiate itself from the competition.
 

Daniel Nenni

Admin
Staff member

"Arm IP customers jumping ship?
As for the notion of Arm IP customers jumping ship to something different? I believe Huang is a pragmatic person, is making a monumental $40B investment, and isn’t interested in messing with what made Arm great. Sure, the combined company will test the waters on a few things, but only if its Arm licensees don’t “go big” after a market segment.

I think many will misjudge how Huang will operate Arm. I believe he respects the Arm business model and doesn’t want to mess with it."

We shall see......
 

Portland

Member

Few things to note

Huang believes Moore's law is dead.

Wants to integrate ai to arm cpu architecture.

Thinks mellonox and nvidia are seperate.

Thinks arm is a foundational company.


With this purchase nvidia will become the priority arm customer. For nvidia it's a question can they chew what they bit off. For everyone else it will shake things up in a year where people just want stability.
 

Portland

Member
The deal was only 12 billion in cash the rest is stock for not a relative lot of money big corporations and others put themselves in a questionable position.
 

Portland

Member
To me it could and most likely hurt the little guy the most. Let's be honest it's people that spent a lot of time and energy being in stem.
 
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