SoftBank Group selling Arm to NVIDIA for up to USD40B

TOKYO (AFP) – Japan’s SoftBank Group said yesterday it is selling British chip designer Arm to United States (US) firm NVIDIA for up to USD40 billion, potentially creating a new giant in the industry.

If approved, the deal will be one of the largest acquisitions anywhere in the world this year, and will propel NVIDIA to the forefront of the semiconductor sector.

The announcement also renewed speculation about SoftBank Group’s future, with Bloomberg News reporting it is set to revive talks about going private via a management buyout plan.

The Arm sale is valued at up to USD40 billion and is subject to approval by authorities in several jurisdictions, including Britain, China, the US and the European Union (EU), SoftBank Group said in a statement.

It hopes the deal will be completed by around March 2022, it added.

A pedestrian walks past a SoftBank telecommunications store on a street in Tokyo. PHOTO: AFP

SoftBank Group shares soared in early morning trade in Tokyo, rising by almost 10 per cent at one point. They ended the day up 8.95 per cent to 6,385 yen.

Founded in 1990 in the United Kingdom, Arm specialises in microprocessors, and dominates the global smartphone market. But its chips are also found in countless sensors, smart devices and cloud services.

NVIDIA, well known for graphics cards that are favoured in the video game industry, has seen sales skyrocket during the coronavirus crisis, with gaming a popular pastime in lockdown.

Its products are also increasingly used for artificial intelligence and in data centres. SoftBank bought Arm in 2016 for USD32 billion in a deal that left investors cold and saw the conglomerate’s stock plunge sharply.

Analysts at the time said SoftBank had paid too much for the firm and the purchase revived concerns about the Japanese company’s balance sheet.

Senior Market Strategist at Asymmetric Advisors in Singapore Amir Anvarzadeh said Arm had been “underperforming”, making the sale more attractive for SoftBank.

But he said the acquisition was “going to raise some eyebrows” in the semiconductor industry, because so many of NVIDIA’s competitors work with Arm’s designs.