World_news Nvidia to buy Arm Holdings from SoftBank for $40 billion – CNBC

World_news

Jensen Huang, CEO of Nvidia

Rick Wilking | Reuters

ChipmakerNvidiahas agreed to buy Arm Holdings, a designer of chips for mobile phones, fromSoftBankin a deal worth $40 billion, the companies announcedSunday. The deal will include $21.5 billion in Nvidia stock and $12 billion in cash, including $2 billion payable at signing. 

Softbank acquired Arm in 2016 for $31.4 billion in 2016 in one of its largest acquisitions ever. Arm is best known as the designer of an architecture used in chips in most mobile phones, including theQualcommchips used in most Android phones, as well asApple’s iPhone. Apple is also planning toshift its Mac computersfromIntelchips to an Arm-based design.

Nvidia, whose chips are widely used to support graphics and artificial intelligence applications, including for self-driving vehicles, pledged that it would “continue Arm’s open-licensing model and customer neutrality.”

SoftBank bought Arm as an investment in the so-called Internet of Things — the idea that wireless connectivity among everyday items such as refrigerators, cars and other devices would lead to useful new scenarios. 

At the time, Softbank Chairman Masayoshi Sontold reporters, “This is a company I always admired for the last 10 years…This is the company I wanted to make part of SofBbank. I am so happy.”

However, SoftBank’s finances have deteriorated this year as the company has lost money on investments in companies likeWeWorkandUber. More recently, the company’sshares lost valueas it was reported that it had taken some large stakes in tech giants, which have suffered a loss in stock market value in early September. It’s unclear how much money SoftBank will actually make on the sale, since it has likely invested a lot in Arm since the acquisition.

The company is also looking for cash to help start-ups it invested in through its Vision Fund, many of which have struggled during the coronavirus pandemic and subsequent lockdowns. Earlier this summer itannouncedit would sell up to $21 billion of its stake inT-Mobile

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