Nvidia Corp. is having advanced talks to acquire Arm Ltd., which is the chip designer that SoftBank Group Corp. bought for $32 billion four years ago, according to people accustomed with the matter.
A deal in the next few weeks is what the two parties aim to reach, asking not to be identified because the information is private, according to what the people said. Nvidia is the only suitor in real discussions with SoftBank, according to the people.
A deal for Arm could be the biggest ever in the semiconductor industry, which has been merging in recent years as companies seek to branch out and add scale. Regulatory scrutiny as well as a wave of opposition from other users would likely be triggered by any deal with Nvidia, which is a client of Arm.
Cambridge, England-based Arm’s technology reinforces chips in products including Apple Inc. devices and connected appliances. Assurances that a new owner would continue providing equal access to Arm’s instruction set could be demanded by Other Arm licensees, such as Qualcomm Inc., Advanced Micro Devices Inc. and Intel Corp. Such worries resulted in SoftBank, a neutral company, buying Arm the last time it was for sale.
The people said that no final decisions have been made, and the negotiations could drag on longer or fall apart. SoftBank may gauge attention from other suitors if it can’t reach an agreement with Nvidia, the people said. Representatives for Nvidia, SoftBank and Arm decided not to comment.
Divestment Drive
Neil Campling, an analyst at Mirabaud Securities, said,“With Nvidia’s low-cost fabless model enabling it to focus on R&D, engineering and programming, the fit with Arm would be perfect.”
With Arm’s products extending beyond mobile devices into smart cars, data centers and networking gear, buying Arm would assist in altering Nvidia into a key player in the semiconductor industry. Nvidia has used its supremacy of high-end graphics chips used by gamers to move into new areas such as artificial intelligence processing for data centers.
Some of SoftBank’s trophy assets is being sold by Billionaire Masayoshi Son, as the company seeks to pay down debt at the Japanese conglomerate. SoftBank has divested part of its stake in Chinese internet giant Alibaba Group Holding Ltd. and a portion of its holdings in wireless carrier T-Mobile US Inc.
Options to exit part or all of its stake in Arm is being explored by SoftBank through a sale or public stock listing, Bloomberg News has reported. People with knowledge of the matter have said that the chip-design company could go public as soon as next year if SoftBank decides to proceed with that option.
As it pushes its architecture into smart cars, data centers and networking gear, Arm has become more valuable. If it pursues an initial public offering next year, The Company could be worth $44 billion, the initial public offering is a valuation that may increase to $68 billion by 2025, according to New Street Research LLP.
Nvidia, based in Santa Clara, California, is the world’s biggest graphics chipmaker. The stock has gushed more than twentyfold in the past five years, which has given the company more firepower to do large deals. Nvidia’s market value has augmented to almost $260 billion in that time, surpassing Intel Corp. After news of the deal talks, the stock slipped to 1.4% Friday morning in New York.