NVIDIA has come to an agreement with Softbank to purchase the company’s ARM division for a reported $40 Billion in a stock and cash deal. The deal means that NVIDIA will control some of the most widely used technology in the semiconductor industry and it is the largest such deal in the industry.
The breakdown of the deal is a cash and stock deal:
- NVIDIA will pay $21.5 Billion in stock
- $12 Billion in Cash including a $2 Billion payment at signing
- $1.5 Billion will be paid to ARM employees in NVIDIA stock
- Softbank could receive an additional $5 Billion in cash or stock if ARM’s performance meets targets.
The deal is overall a significant plus for SoftBank. The company acquired ARM back in 2016, paying $31.4 Billion at the time. With the deal announced this weekend, ultimate Softbank will own less than 10% of of NVIDIA when the deal is completed.
As for when the deal will be completed, that will be some time. Regulators in the European Union as well as the United Kingdom, United States, and China. In an effort to signal good will, NVIDIA has already indicated that ARM will “continue to operate its open-licensing model while maintaining the global customer neutrality that has been foundational to its success.” It could take upwards of 18 months before the deal is truly finalized once regulatory approval is achieved.
The bigger question is how this impacts Apple, who have not had the best of relationships with NVIDIA in the past. NVIDIA has indicated it wants to do nothing that disrupts current relationships ARM has nor upset its business processes. In theory, that sounds good and correct but ultimately how this plays out for Apple, who uses ARM-based technology for its A-based SoC’s and will for Apple Silicon, time will tell. Fortunately for Apple, they are designing much of their own silicon, using base level ARM technology so, in theory, they should be somewhat insulated.