Arm sold to Nvidia for $40billion

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NVIDIA announced that it will acquire Arm from SoftBank in a deal that is valued at $40 billion. Nvidia will also issue $1.5 billion in shares to Arm employees. Nvidia CEO Jensen Huang has been quoted by both Bloomberg and the New York Times as stating a major priority will be expanding Arm chips for networking and cloud computing - an area that Intel has a 90% share in. "Someday, trillions of computers running AI will create a new internet - the internet-of-things - thousands of times bigger than today's internet-of-people". Nvidia will add its technology to the offerings licensed by Arm, the Santa Clara, California-based company said.

Forbes analyst Patrick Moorhead believes Nvidia's purchase of Arm is not only the "most important semiconductor deal ever," but also a flawless fit. And Arm will continue to be based on Cambridge, UK. SoftBank owns three-quarters of Arm, and the Vision Fund, in which SoftBank has a big stake along with the sovereign-wealth funds of Saudi Arabia and Abu Dhabi, owns a quarter.

Nvidia CEO Jensen Huang said the US company still plans to keep Arm based at its headquarters in Cambridge, England, where it will also build an artificial intelligence research center. Companies like Apple, Qualcomm and others rely on licensing ARM technology, so there will be plenty of regulatory scrutiny before the acquisition can be approved.

Struck overnight, the sale to the USA company just four years after SoftBank bought Arm will put vital supplies to Apple and others under the control of a single player, sparking potential pushback from regulators and Nvidia's rivals. It's the most expensive deal in the semiconductor space to date, and it would put NVIDIA in control of the technology that powers most of the world's smartphones and a growing number of other devices. This AI research will support industries like healthcare, science, robotics, self-driving vehicles and more. The deal will make NVIDIA into an even larger presence in mobile computing, especially when it comes to bringing its AI technology into platforms like smartphones, PCs and self-driving cars.

"That's probably more the case now than ever - and with Softbank's official commitments to Arm's Cambridge site due to expire in 2021 the deal may well come with additional strings attached from the United Kingdom government".

The deal, announced overnight, drew criticism from Hermann Hauser, a co-founder of Arm who said in an interview it would spell disaster for Cambridge, Britain and Europe.

The chief executives of Nvidia and Arm told Reuters in an interview that Nvidia will retain Arm's United Kingdom headquarters - which exempt it from many U.S. export control laws - and open licensing model. The transaction does not include Arm's IoT Services Group.

One component of the deal I haven't seen discussed much is what it could mean for US-China trade relations.

We expect Nvidia to unveil plans for how it will deal with regulatory concerns and make certain ARM's existing customers retain uninterrupted access to IP and do not fear being blocked out of future access to processor designs.