Graphics chipmaker Nvidia is reportedly interested in buying chip design large Arm. The Santa Clara, California-based company made an approach about a potential deal in the recent weeks, Bloomberg reports citing people familiar with the matter.
SoftBank Group, the Japanese owner of Cambridge, England-based Arm is looking to sell part or all of its stake in the company. It has been exploring a potential sale or initial public offering (IPO) for the business. The Tokyo-based conglomerate has now gathered interest from Nvidia.
The report adds that other potential bidders could also emerge in the coming days. However, those interests may not lead to a deal. SoftBank may still opt for an IPO, Bloomberg says. The company appears to be primarily looking to return the chip designer to the public market.
Arm was the UK’s largest listed technology company before SoftBank acquired it in 2016. The latter acquired Arm through its $100 billion Vision Fund for about $32 billion.
Nvidia is looking to buy Arm
Softbank is selling off some of its assets to buffer cash reserves during this economic uncertainty created by the COVID-19 pandemic. The company has sold off $13.7 billion worth of stock in Chinese e-commerce giant Alibaba this year. It also sold off a large chunk of its holdings in wireless carrier T-Mobile.
Now, the company is looking to sell it chip design business as well. The company reportedly approached Apple to gauge its interest in acquiring Arm. However, the latter didn't show any intent. According to the report, Arm’s licensing operation would fit poorly with Apple’s hardware and software business model. And since Arm is a key licensee to so many of Apple's rivals, there are also some regulatory concerns about Apple owning the British company.
In fact, any tech firm acquiring Arm would be under regulatory scrutiny. There are many companies using Arm's technologies and they'll demand assurance that the new owner would continue to provide the same level of access. This is the primary reason Softbank, a neutral company, bought Arm last time it was up for sale.
Interestingly, Softbank also owned a stake in Nvidia previously. It had $4 billion worth of shares in the American company in 2017. However, its $100 billion Vision Fund sold off all of its Nvidia holdings in early 2019.
Nvidia has been working closely with Arm in recent years. Last year, it announced a partnership to build GPU-accelerated Arm-based servers for high-performance computing. It now looking to buy out Arm isn't really surprising. If it does reach a deal with Softbank, this could become the biggest-ever acquisition in the chip industry. It'll be interesting to see how things shape up in the coming days.