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American graphics chip maker Nvidia has confirmed that it will buy UK-based chip designer ARM from Japan’s Softbank for USD 40 billion (~ RM166 billion). The deal is meant to create a new giant in the chip industry, propelling Nvidia to greater heights as it leverages ARM technologies to gain a foothold in the mobile computing arena.
Softbank acquired ARM in 2016 for USD 31 billion (~ RM129 billion) in what was considered the largest deal in the semiconductor industry at the time. The Japanese tech conglomerate will own less than 10% of ARM after the sale to Nvidia.
Nvidia is the leading GPU manufacturer, which ARM also designs, with its hardware used to power today’s cutting edge video games. The Santa Clara headquarters has also branched out into other areas, including artificial intelligence (AI), autonomous cars, and data centers. The company recently released its latest RTX 30 series GPUs that promise to support games up to 8K.
Meanwhile, ARM supplies its chip technology, which powers mobile processors, to a variety of companies, including Apple, Samsung and Qualcomm. The Cambridge-based company does not make chips, but licenses its technology to others to make chips from it. Lately, the company has risen to prominence when Apple announced its plans to switch future Macs to ARM-based chips.
Under the agreement, ARM will operate as a division of Nvidia and remain based in Cambridge, where Nvidia said it intends to build a new AI research center. Nvidia does not intend to shake the boat as it does not want ARM to change its current licensing model, while maintaining its status as a technology neutral provider. A Bloomberg report said that Nvidia has no incentive to do anything that forces customers to withdraw.
Previously, Nvidia had great ambitions to diversify its business to make CPUs for phones. But Nvidia hasn’t been doing much in terms of CPU or mobile hardware design, aside from its Tegra mobile chipsets used in devices like the Nintendo Switch.
Both Nvidia and ARM see this as an opportunity to create artificial intelligence software that takes advantage of ARM chips that run on everything from smartphones to servers. Last year, Nvidia expressed an interest in building supercomputers, with the help of ARM processors. The move was prepared to help the company delve into advanced systems used to model complex problems such as climate change predictions.
“AI is the most powerful technological force of our time and it has launched a new avenue of computing,” Nvidia CEO Jensen Huang said in a statement. “In the coming years, trillions of computers running AI will create a new Internet of Things that will be thousands of times larger than today’s Internet of People. Our combination will create a company in a fabulous position for the AI era. “
Although both Nvidia’s and ARM’s boards have approved the acquisition, the deal will have to pass regulatory approval in various jurisdictions, including the US, UK, EU and China. Nvidia’s purchase of ARM is very likely to face intense scrutiny from regulators. The companies expect the transaction to close in 18 months if there are no delays.
[SOURCE]