Softbank considering $40bn ARM sale to Nvidia

Japan-based holding company SoftBank Group is preparing to sell UK-based semiconductor manufacture ARM to American multinational technology company Nvidia for a deal worth more than $40 billion. 

Softbank which bought ARM around 4 years ago for $32 billion is reportedly discussing a cash-and-stock deal in the low $40 billions. Both parties have been working on a deal for several weeks with the deal likely to be sealed early next week unless there are any last-minute hiccups.

ARM which designs microprocessors that power most of the world’s smartphones is expected to create a powerful leader in the semiconductor, chip manufacturing sector with its acquisition by Nvidia.

Nvidia which is often as second to Intel has become a fast-growing industry player whose chips are used to run the intense calculations for graphics and play a key role in videogaming, cloud-computing and other activities which have seen a meteoric rise in demand ignited by the pandemic.

The firm’s shares have grown more than 100% this year, making it the best-performing stock in the S&P 500 index.

A potential deal among these industry leaders will make it one of the largest transactions so far this year and potentially the largest semiconductor deal ever.

The semiconductor sector has been several consolidations as chipmakers eye economies of scale and expand their product portfolios to support the increasing demand for components used in everyday items that are connected to the internet which are also known as the Internet of Things.

Another of the year’s biggest deals was the by fellow chipmaker Analog Devices’ $22 billion acquisition of Maxim Integrated Products.

A sale to Nvidia could attract scrutiny from antitrust regulators and potential pushback from Arm’s customers, which include major chipmakers and electronics manufacturers such as Intel, Samsung Electronics and Apple.