GPU maker Nvidia buys Chip Maker ARM for $ 40 billion

California-based Nvidia is buying Arm Holdings, a British computer chip designer, from Softbank Group Corp. in a deal worth $ 40 billion.

Chip giant Nvidia, which specializes in the production of hardware for video game consoles, GPUs for graphics cards, processors for the AI ​​industry and whose chips are used by, among others, the cryptocurrency mining industry, said in a statement. press release that it would pay Softbank a combination of cash and stock in the transaction. The Japanese conglomerate bought Arm for $ 32 billion in 2016.

According to Jensen Huang, chief executive of Nvidia, the latest agreement is expected to create “the leading information technology company for the age of artificial intelligence” (AI). He added that Arm will remain headquartered in Cambridge, England, and will retain its brand.

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

The graphics processing units (GPUs) manufactured by Nvidia are mainly used in video game consoles and graphics cards, but have also been used to mine digital assets such as Ethereum (ETH), Monero (XMR) and Zcash (ZEC). GPUs are now useless for bitcoin (BTC) mining, which has moved on to more efficient application-specific integrated circuit (ASIC) miners.

Arm’s technology is the backbone of most existing smartphone technology. The company creates designs that other companies like Apple, Samsung Electronics, and Huawei develop into custom chips. Its technology is also starting to gain ground in cloud data centers. To date, Arm says 180 billion chips have been made based on his designs.

Simon Segars, CEO of Arm, explained: “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.”

Under the terms of the transaction – approved by the boards of directors of Nvidia, Softbank and Arm – Nvidia will pay Softbank $ 21.5 billion in stock and $ 12 billion in cash. At least $ 2 billion is payable upon signature. Softbank can also receive up to $ 5 billion in cash or stock if certain goals are met. Nvidia will issue $ 1.5 billion in shares to Arm employees.

The deal offers Nvidia access to mobile chips, but is likely to face close scrutiny from regulators who may be concerned about monopoly and conflict of interest issues. In the UK, several business executives have already signed an open letter asking Prime Minister Boris Johnson to stop the acquisition.

Shares of Nvidia fell roughly 4% to $ 500.58 in the Nasdaq stock market on Wednesday before plunging further to $ 498.92 on Thursday. Over the past 52 weeks, the stock has fluctuated between a high of $ 589.07 and a low of $ 169.32. Nvidia boasts a market capitalization of over $ 340 billion.

Nvidia was founded in 1993 and initially began selling computer cards designed to enhance the gaming experience. It subsequently expanded into other markets, including at least one foray into the cryptocurrency mining hardware business.

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