The big picture: In acquiring Arm, Nvidia CEO Jensen Huang stated that Nvidia will build the premiere computing company for the age of AI, which Nvidia has long touted as the future. With access to Arm's IP and the Arm instruction set architecture that underpins Arm-based chips, Nvidia will look to develop its own custom CPUs to fuel an ever broadening push into the data center, AI, big data, autonomous vehicles, supercomputers, and more.
Follow-up analysis: Nvidia purchase of Arm completely resets semiconductor landscape
Nvidia has announced that it has reached an agreement with SoftBank to acquire Arm Limited, in a transaction worth $40 billion financed using common stock and cash. While Nvidia will take possession of Arm and its lucrative IP portfolio, the transaction does not include Arm's IoT Services Group, which will remain with SoftBank.
The transaction is expected to be "immediately accretive to Nvidia’s non-GAAP gross margin and non-GAAP earnings per share." Additionally, SoftBank notes it will continue to remain invested in Arm through its shareholder stake in Nvidia, which is expected to come in under 10 percent.
There will be several regulatory hurdles to be cleared in the process, and Nvidia notes that the acquisition could take up to 18 months to complete. The deal will require regulatory approval from the U.K., China, the European Union, and the United States.
Nvidia has stated that they will remain committed to maintaining Arm's neutrality in licensing its IP. "Arm’s business model is brilliant. We will maintain its open-licensing model and customer neutrality, serving customers in any industry, across the world, and further expand Arm’s IP licensing portfolio with Nvidia’s world-leading GPU and AI technology," said Jensen Huang in a letter to Nvidia employees.
Furthermore, Nvidia intends to keep Arm based in the U.K., as well as keeping Arm's IP and trademarks registered in the U.K.
Nvidia has committed to make substantial future investments in Arm's home base of Cambridge, with plans to expand Arm's research and development presence, as well as building a new Arm-based supercomputer that will be housed at a new AI research center.
The new AI research center will also see Nvidia and Arm host research fellowships, AI training, as well as a startup accelerator that will build on Nvidia's Inception program. Nvidia will be hosting a conference call and webcast on Monday, September 14, to further discuss the details of the acquisition.