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SoftBank closes in on $40bn deal with Nvidia for UK’s Arm Holdings

Suban Abdulla
·2-min read
SoftBank Group Corp. Chairman and Chief Executive Officer Masayoshi Son. Arm Holding's technology powers most of the world’s smartphones. Photo: Tomohiro Ohsumi/Getty
SoftBank Group chairman and CEO Masayoshi Son. Arm Holding's technology powers most of the world’s smartphones. Photo: Tomohiro Ohsumi/Getty

SoftBank (SFTBY) is set to sell British chip designer Arm Holdings to US chip company Nvidia (NVDA) for more than $40bn (£31bn).

According to the Wall Street Journal, which first reported the story, a deal to sell Arm — whose technology powers most of the world’s smartphones — could be finalised as early as next week. Nvidia’s acquisition of Arm could help create a giant in the chip industry.

Nvidia, known for its graphics chips that power video games, also developed for other markets including self-driving cars, artificial intelligence and data centres.

Arm and Nvidia have been in exclusive talks for weeks, according to people familiar with the matter.

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It comes four years after billionaire Masayoshi Son, SoftBank’s founder, bought Arm Holdings — its largest ever purchase — for $32bn, in 2016.

At the time of the 2016 deal, Nvidia’s value was roughly similar to that of Arm’s, but it now trades with a market value of $300bn, or roughly 10 times the amount the Japanese company paid in cash for Arm, the Financial Times reported.

A deal would be a big win for SoftBank, which has struggled to kick-start growth for the business.

However, SoftBank’s sale of Arm could prompt antitrust scrutiny and potential pushback from Arm’s customers, including big chip makers and electronic manufacturers, such as Apple (APPL), Intel (INTC) and Samsung Electronic co (BC94.L), according to the Wall Street Journal.

Arm, has previously collaborated with Nvidia, as the British company does not make chips itself, rather it licences out the underlying technology so other firms can make chips with it.

Last year, the US company said that it would use Arm processors to make chips to build supercomputers.

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SoftBank Group, founded by Son in 1981, gained popularity as a telecoms and broadband business in Japan in the 1990s and 2000s. But, in recent years Son split up the telecoms infrastructure and focused on investing in next generation technology through its $100bn Vision Fund.

The Vision Fund lost $18bn last year, pushing it to a $13bn annual loss, after several high-profile bets, such as WeWork ran into trouble.

Recently SoftBank came under pressure after it was “unmasked” as the Nasdaq (^IXIC) whale that stoked tech stocks, causing the tech-heavy Nasdaq (^IXIC) to close down 2%.

Last month, the Japanese conglomerate said it would reduce its holding of its telecoms company SoftBank Corp, seeking to raise around $14bn selling shares.