Nvidia has signed up to a $40 billion cash and shares agreement to acquire Arm from Softbank. Softbank will retain an interest in Arm, with a stake of approx 10 per cent. In a press release Nvidia heralded the deal as bringing together its leadership in artificial intelligence with Arm's vast computing ecosystem "to drive innovation for all customers". Nvidia also made statements which address government, regulatory, and industry worries about this significant acquisition.
"Simon Segars and his team at Arm have built an extraordinary company that is contributing to nearly every technology market in the world. Uniting Nvidia's AI computing capabilities with the vast ecosystem of Arm's CPU, we can advance computing from the cloud, smartphones, PCs, self-driving cars and robotics, to edge IoT, and expand AI computing to every corner of the globe," said Nvidia CEO Jensen Huang about the potential he sees in this deal. "This combination has tremendous benefits for both companies, our customers, and the industry. For Arm's ecosystem, the combination will turbocharge Arm's R&D capacity and expand its IP portfolio with Nvidia's world-leading GPU and AI technology."
Understandably Softbank, which is highly motivated to liquidise its investment, welcomed the deal as being highly attractive for Nvidia, Arm, and the UK. Simon Segars, CEO of Arm, agreed that Arm and Nvidia are a good match, sharing a vision for energy efficient computing to address a host of pressing issues, with strong commitment to long term R&D to reach their goals.
In its press release about the deal, Nvidia has made a number of statements designed to ease government, regulatory, and industry tensions about the deal. Key statements addressing concerns about Arm's UK base, and Nvidia's position on open-licensing were made, which I have summarised below.
Firstly, Nvidia pledges to expand Arm's R&D presence in Cambridge, UK, building "a new global centre of excellence in AI research at Arm's Cambridge campus". Furthermore, Nvidia says it will invest in a state-of-the-art, Arm-powered AI supercomputer, training facilities for developers and a startup incubator packed with world-class research talent. The UK base will be a platform for innovation and industry partnerships in fields such as healthcare, robotics and self-driving cars, asserts Nvidia.
Understandably, a number of Arm tech licensees see a potential for changes in Arm's business model that will not be in their favour. Nvidia appears to pledge that it won't change the Arm open-licensing model. Moreover, it says that it will maintain "the global customer neutrality that has been foundational to its success, with 180 billion chips shipped to-date by its licensees". It is teased that going forward Arm partners could benefit from Nvidia's numerous processor innovations too.
Before this deal goes forward Nvidia and Softbank will be looking for regulatory approvals for the UK, China, the European Union and the United States. If all goes as planned the deal is expected to close in about 18 months.
Is Nvidia a safe pair of hands?
Arm co-founder Hermann Hauser was on BBC Radio 4 this morning talking about Softbank's sale of Arm to Nvidia. Hauser didn't hold back, calling the takeover an "absolute disaster," which would destroy Arm's business model and lead to job losses at the Cambridge HQ and elsewhere in the UK. Hauser pointed out that any assurances made about jobs must be legally enforceable or we could see the situation evolve soemwhat like Kraft's takeover of Cadbury in 2010.
The BBC reports that leading figures in the Cambridge technology sector have recently lobbied Downing Street, "calling for ministers to intervene to bring Arm back under UK ownership." With the UK government making noises about having a trillion dollar tech company in the British isles, and highlighting the fact it wants to be able to use state aid to advance UK industries, it will be interesting to see how this develops.
Nvidia will host a webcast and conference call at 5.30 am PT (13.30 BST) today.
