Remember when NVIDIA was trying to compete in the mobile chip market? It was interesting and exciting, and it choked off pretty quickly – now you only see Tegra in the SHIELD and Switch. But a big part of NVIDIA is back in the market: by buying Arm Limited, which licenses the design of most of the world’s smartphone chips.
NVIDIA announced Sunday that it intends to acquire Arm Limited, buying it from its current parent company SoftBank for $ 40 billion in cash and shares. As the world’s leading producer of graphics processing units, NVIDIA is no stranger to the chip design process – not even Arm’s designer-licensee business model. The deal would make NVIDIA a central player in the mobile market and beyond virtually overnight.
A bit of background: Arm Limited (also known as Arm Holdings or simply “ARM”) designs a chip architecture and then licenses the manufacturers who actually build the chips in their own factories. So, Arm is designing a new generation of chip foundations, then companies like Qualcomm, Apple, Samsung, and MediaTek pay for those designs, customize them according to their needs, and then make the chips themselves for use in your phone, tablet, low powered computer, et cetera. NVIDIA does not buy the companies that actually make the Snapdragon, Apple Silicon, Exynos, yadda yadda chips, but it does buy the technology they are all based on.
NVIDIA has announced plans to keep Arm at its current headquarters in Cambridge, England, supplementing it with a new AI research facility and a new supercomputer center. As part of the acquisition, NVIDIA announced that it will distribute $ 1.5 billion to current Arm employees in the form of equity.
But the deal is far from being concluded. NVIDIA’s press release says the company hopes to go through the regulatory process in 18 months, which looks optimistic. The PR also says they will need the approval of relevant government councils in the United States, the United Kingdom, the European Union and China. The EU has been hostile to US technology acquisitions for decades, and the US administration very public battle on TiqTok is not likely to speed up the regulatory process in China.