NVIDIA Buys Arm for $40 Billion

The Largest Semiconductor Deal Ever

NVIDIA (NVDA) will buy Arm, a UK-based chip designer, for $40 billion from SoftBank. This is the largest deal ever to take place in the semiconductor industry.

NVIDIA will pay $12 billion in cash and $21.5 billion in stock, as well as a $2 billion fee when the deal is signed. If Arm reaches certain financial goals, SoftBank may receive an additional $5 billion in cash and/or stock. (Full disclosure: SoftBank is also an investor in SoFi)

Arm designs chips, but does not make them. The company’s chip blueprints are used by companies from Apple (AAPL) to Qualcomm (QCOM), and are present in almost every mobile device in the world.

A Brief History

SoftBank acquired Arm in 2016 for $31.4 billion. The Japanese conglomerate’s stock soared yesterday on news of the deal with NVIDIA. SoftBank shares rose 10% in Tokyo—the largest jump in about six months.

Earlier in the summer, SoftBank also announced it would sell $21 billion of its stock in T-Mobile (TMUS). With the new influx of cash from these sales, SoftBank may channel some of these funds to startups through its Vision Fund.

NVIDIA’s Outlook

NVIDIA specializes in making graphics cards, which is a piece of computer hardware that produces the image you see on a monitor. The company has seen its revenue surge this year—in part due to more people playing video games during the pandemic. NVIDIA’s overall revenue climbed 50% during the quarter ending on July 26 and rose 39% during the previous quarter. The company expects 46% sales growth during its fiscal third quarter, equivalent to $4.4 billion in top-line revenue.

SoftBank was viewed as a neutral owner of Arm, but NVIDIA competes with some of the companies which use Arm’s designs. This could raise some questions as the deal goes through a regulatory approval process. However, all three companies involved are excited about the agreement and optimistic about the outcome.

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS091503