Nvidia Said to Be Close on Arm Deal

By George Leopold

August 3, 2020

GPU leader Nvidia Corp. is in talks to buy U.K. chip designer Arm from parent company Softbank, according to several reports over the weekend.

If consummated, analysts said the acquisition would cement Nvidia’s status as a full-service chip vendor controlling its destiny while challenging chip rival Intel Corp.

The Financial Times reported the parties are considering a cash-and-stock deal valued at more than $32 billion. The publication cited two persons familiar with the talks. Negotiations for a potential acquisition of Arm have reportedly been underway for months after Nvidia approached Softbank, which has been hemorrhaging cash and is looking to sell assets.

Bloomberg also reported talks between Nvidia and Softbank.

Nvidia declined to comment on the Arm acquisition reports.

Softbank Group Corp., which launched an AI investment fund last year, acquired Arm Holdings in July 2016 for about $32 billion, saying at the time it hoped to make the chip design specialist the centerpiece of its technology investments.

Nvidia moved last year to fully incorporate Arm CPUs into its processing architectures. The chip IP vendor has since become a more attractive acquisition target after wresting a design win from Intel for Apple devices. (Apple previously surfaced as a potential Arm suitor.)

Intel recently announced a one-year delay in releasing its 7-nanometer process technology.

Industry analysts have noted a closer relationship with Arm would give Nvidia insurance if future Intel or AMD servers are incompatible with its GPUs, especially since both chip rivals are developing their own graphics processors. Those co-processors rely on compatibility with a host CPU.

“Nvidia’s position is precarious,” said Addison Snell, CEO of Intersect360 Research. “My major doubt is whether an acquisition is the best way to make this happen, as opposed to some form of preferred licensing agreement, which would present fewer potential entanglements.”

Nvidia’s deal for Arm also would face antitrust scrutiny by the European Union, the U.S. and China. “There are concerns expressed that Nvidia’s competitors would be alarmed and maybe move to RISC-V—which Nvidia also has a stake in. But that would be stupid, and Nvidia is not stupid,” said graphics industry analyst Jon Peddie.

“Being vertically integrated is where Nvidia is headed,” added Peddie, who called a potential deal for Arm a “brilliant move.” Like Apple, Nvidia “wants to control its own destiny, and with Arm it has all the bits and pieces—other than commodity ridden memory—to build and offer high value-add edge and local servers.”

Industry observers also note the acquisition of Arm would boost Nvidia’s HPC prospects as Arm’s chip IP makes inroads in supercomputer designs, server-side AI model training and self-driving vehicles.

Nvidia stock jumped Monday (Aug. 3) on reports of a potential deal for Arm.

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