It’s official! Nvidia has confirmed that it is acquiring the British chip designer, ARM, from SoftBank for $40 billion. The said deal basically places companies like Apple Inc. and others across the industry under a single player. There is also a risk of experiencing potential push back from regulators and Nvidia rivals. This transaction will instantly transform Nvidia into one of the most influential players in smartphone technology, a market that had previously eluded it.
Execution of the deal
Initially, Nvidia will pay SoftBank $12 billion in cash and $21.5 billion in Nvidia shares. It will also include $2 billion on a signing. SoftBank may also receive up to $5 billion in cash or common stock. But, that will solely depend on ARM’s business performance. Further, Nvidia will pay $1.5 billion to ARM employees. The sale marks a quick exit for SoftBank, four years after the $32 billion acquisition of the British chip technology firm. Chief Executive Matayoshi Son has said,
SoftBank is excited to invest in ARM’s long-term success as a major shareholder in Nvidia.
ARM has been a part of many internet-connected devices but the profits have been squeezed by spending on hiring and other factors. The deal is subjected to regulatory approvals in Britain, the United States, and China, and is expected to close in March 2022.
Certain concerns around the deal
Furthermore, Nvidia has promised that ARM’s headquarters will not be shifted, and its intellectual property will also be registered in the U.K. itself. The company will continue to operate as it did before the buyout. Moreover, British officials are delighted by the company’s expansion plans. However, the deal is already facing certain criticism in Britain.
Some employees are worried about losing their jobs after ARM is taken over by an American company. According to the co-founder of ARM, Herman Hauser, this deal will leave businesses that use ARM semiconductor technology vulnerable. There is a risk since America can act against China in the future. Due to the rivalry between the two countries, the Trump administration has taken certain steps. These actions will limit certain companies from exporting to China. Mr. Hauser thinks that this is an absolute disaster for Cambridge, the U.K., and Europe.
More about ARM
SoftBack acquired ARM back in 2016. ARM is widely perceived as an independent company that believes in giving equal treatment to all licensees. The company provides its chip designs to Qualcomm Inc, Apple, Samsung Electronics Co Ltd, and many others. These companies use them in their smartphones and other devices. Additionally, Apple’s upcoming Mac computers will use ARM-based chips.