(Image courtesy of Arm.)
How much would you sell your arm for? For SoftBank Group, the answer is $40 billion. The Japanese holding company has signed a definitive agreement to sell chipmaker Arm to GPU giant NVIDIA.
The $40 billion acquisition will consist of $21.5 billion in NVIDIA common stock, $12 billion in cash, $1.5 billion in equity to Arm employees, and up to $5 billion in cash or stock under an earnout agreement. SoftBank purchased Arm in 2016 for $31 billion, which at the time was the largest ever purchase of a European technology company. Looks like it paid off.
It's All About AI
So why did NVIDIA just drop $40 billion? Normally when you pay an arm and a leg for something, you don’t expect to get one Arm back. But NVIDIA has big plans for theirs. With Arm, NVIDIA is looking to position itself as the “world’s premier computing company for the age of AI.” It sounds like they’re making a play for world domination, and they might even have a shot. NVIDIA’s market value recently surpassed $300 billion, spurred in part by pandemic demand for GPUs.
“AI is the most powerful technology force of our time and has launched a new wave of computing,” proclaimed 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.”
Arm on the Rise
NVIDIA has firmly established itself as a leader in the GPU world, recently making waves for its insanely powerful new RTX graphics cards. With its agreement to acquire Arm, NVIDIA is now moving into the CPU world. And there’s one company—it’s got a blue logo and it rhymes with jintel—that should watch out.
The world’s fastest computer, the Fugaku supercomputer in Kobe, Japan, has the distinction of being the first Arm-based computer to earn the number one spot on the TOP500 ranking. Out of the top 500 supercomputers ranked biannually, 469 are Intel-based. For now.
This past June, Apple announced that it’s phasing out Intel for Arm-based processors in Mac computers. The company’s iPhones, iPads, and Apple Watches already use Arm-based chips, as do most other mobile devices on the market. Arm claims that there are 180 billion Arm-based chips out in the wild.
Closing the Deal
Under the NVIDIA acquisition, Arm will continue to operate its open-licensing model under the Arm brand. NVIDIA has committed to expand Arm’s Cambridge campus with a “new global center of excellence in AI research” and will keep Arm’s intellectual property registered in the U.K.
Subject to all the customary closing conditions, the acquisition is expected to be completed in 18 months. It will not include Arm’s IoT Services Group.