American hardware giant Nvidia is to buy UK chipmaker Arm from Japanese technology major SoftBank for $40bn.

The deal, which was announced on Sunday evening, with the two companies announcing a definitive agreement that will see NVIDIA purchase Arm for a combination of $12bn cash and $21.5bn of its common stock. Arm employees will also receive $1.5bn in equity from Nvidia.

Arm was purchased by SoftBank in 2016 in a move that then caused shockwaves in the UK tech sector.

However, the acquisition of Arm by Nvidia, of which SoftBank is a former shareholder, is being characterised by the graphics giant as a means to bolster its presence in the rapidly growing artificial intelligence (AI) computing space.

“AI is the most powerful technology force of our time and has launched a new wave of computing,” said Jensen Huang, founder and CEO of Nvidia.

“In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people. Our combination will create a company fabulously positioned for the age of AI.”

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SoftBank sells Arm to Nvidia: A key move in AI

For Nvidia, Arm represents a key edge in the growing AI space.

“Simon Segars and his team at Arm have built an extraordinary company that is contributing to nearly every technology market in the world,” said Huang.

“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.

“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.”

As part of the move, Arm will expand its research and development presence in Cambridge, the UK, establishing what Nvidia is calling a “world-class research and education centre”.

“We will expand on this great site and build a world-class AI research facility, supporting developments in healthcare, life sciences, robotics, self-driving cars and other fields,” said Huang.

“And, to attract researchers and scientists from the UK and around the world to conduct groundbreaking work, Nvidia will build a state-of-the-art AI supercomputer, powered by Arm CPUs. Arm Cambridge will be a world-class technology centre.”

Arm’s open-licencing model and customer-neutral approach will also be maintained.

“Arm and Nvidia share a vision and passion that ubiquitous, energy-efficient computing will help address the world’s most pressing issues from climate change to healthcare, from agriculture to education,” said Simon Segars, CEO of Arm.

“Delivering on this vision requires new approaches to hardware and software and a long-term commitment to research and development.

“By bringing together the technical strengths of our two companies we can accelerate our progress and create new solutions that will enable a global ecosystem of innovators.”

SoftBank divestment continues

The sale of Arm to Nvidia comes as SoftBank continues to divest in response to serious losses amid the pandemic and a number of bad bets.

Other divestments this year include the sale of its stake in T-Mobile and $2.2bn of shares in Alibaba. It also believed to be planning to sell its 80% stake in Indian green energy firm SBG Cleantech.

For Softbank, however, the sale of Arm will bring the added benefit of returning it to shareholder status at Nvidia.

“Nvidia is the perfect partner for Arm,” said Masayoshi Son, chairman and CEO of SoftBank Group.

“Joining forces with a world leader in technology innovation creates new and exciting opportunities for Arm. This is a compelling combination that projects Arm, Cambridge and the UK to the forefront of some of the most exciting technological innovations of our time and is why SoftBank is excited to invest in Arm’s long-term success as a major shareholder in Nvidia.”

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