Rumor mill: Nvidia has shown interest in acquiring Arm in what would be one of the most significant and likely expensive tech deals of all time. Should Team Green take control of the semiconductor designer, it could gain a tight grip over much of the industry, meaning any acquisition is likely to be met with intense regulatory scrutiny.
Update (July 31): What only seemed like a wild rumor a week ago, has gained substance over the past week. Both Bloomberg and Financial Times are reporting that Nvidia is in talks to buy the Arm from SoftBank in a cash-and-stock deal that would value the chip designer at more than $32 billion. Back in 2016, Softbank paid around $31 billion for UK-based Arm, which became part of the Japanese conglomerate's $100 billion Vision Fund—the world’s largest venture capital fund.
Nvidia may see itself in a perfect position for the takeover and the unique opportunity presented considering its stock has skyrocketed, gaining over 50% in value this year and more than doubling since mid 2019. According to Q2 filings, Nvidia also has over $15 billion of cash on hand.
Softbank has been offloading some of its assets recently to help lessen the impact of the Coronavirus-related economic downturn. Part of its holdings in Alibaba Group and T-Mobile have been sold off, and it is looking to sell part or all of its stake in Arm; it's also considering an IPO for the design company.
Largest tech deals in history:
|Avago Technologies||Broadcom||$37 billion||2015|
|IBM||Red Hat||$34 billion||2018|
|Softbank||ARM Holdings||$31.4 billion||2016|
Softbank once owned part of Nvidia, having amassed $4 billion of shares in 2017, but all its holdings in the firm were sold off last year. According to Bloomberg, Nvidia recently made an approach to buy Arm. Increased demand in the gaming, hardware, and data center sectors has seen Nvidia’s stock soar this year. Shares currently stand at $417, giving it a market cap of $256 billion. For comparison, rival AMD has a value of $72.3 billion.
Arm has long licensed its technology to some of the industry’s biggest players, and has seen its profile rise even higher in the past few months as the Arm-powered Fugaku became the world’s fastest supercomputer, and Apple announced it was transitioning the Mac away from Intel’s chips to a custom Arm-based SoC.
It’s likely that an Nvidia acquisition of Arm would bring anti-competitive questions from regulators. The latter’s chip architecture designs and IPs are found across a vast range of products, and handing that much power to Nvidia would concern licensees, especially Apple. The claims are all rumors for now, so we can’t be certain of their accuracy, but if a deal does eventually go through, it will shake up the industry like nothing before.