Nvidia is close to sealing their purchase of rival chip manufacturer Arm Holdings. In a report, the UK-based brand from SoftBank will sell for US$40 billion.
SoftBank Group recently bought Arm themselves, paying a full $32 billion in 2016. Arm Holdings is an emerging alternative processor to the likes of Intel and AMD. Once Nvidia completes the purchase, the graphics card company can also dominate the processor market.
Nvidia will buy Arm “above value”
According to the report, insiders say that the cash-and-stock takeover will come out as soon as Monday. The payment for the takeover will include some of their shares to cover the transaction.
The report notes that the valuation for Arm is at $32 billion now. These numbers are equal to the purchase price that the Japanese company SoftBank had. With an alleged $40 billion tag, Nvidia will buy the company’s assets above value.
Nvidia knows that the value of Arm will only go up as they improve on their system. The market value of Arm, for example, goes at $300 billion. The ten-fold value will be advantageous to Nvidia and even SoftBank.
Since part of SoftBank’s payment will be shares, Nvidia’s best interest is to succeed. The latter passes off the transaction’s risk to Softbank but also rewards them once everything goes smoothly.
Nvidia overtook Intel recently as the most valuable chipmaker in the world. The acquisition of Arm will consolidate their position further as the center of the industry.
Nvidia to dominate semicon world with Arm, other acquisitions
Nvidia’s potential acquisition of Arm Holdings can mean an emerging dominance for the company. The Arm business model will create a steady flow of income for Nvidia. It will also seal their presence in most consumer electronics in the future.
Apple recently announced that they’re moving away from Intel. Apple Silicon ARMs will come into many of their devices, including their Macbook line. Arm also has 1550 licensees in 2019, which is expansive.
The market share of Arm extends far beyond the PC marketplace. They have shares in the smartphone and tablet industry too. Soon, Arm will push into enterprise solutions like servers, embedded intelligence, and more.
Intel is still experiencing trouble with their 7nm process. Doing so prevents them from further innovating into the market, even with their Tiger Lake processors. While AMD is leading, Arm is filling the gaps that both can’t reach.
Nvidia is not stopping at Arm Holdings any time soon. They recently acquired Swiftstack, a data storage and management platform. Nvidia also bought Mellanox, the supplier of Infiniband and Ethernet products.