NVIDIA Nears $40B Deal To Acquire Arm But Antitrust Blowback Could Follow

nvidia endeavor headquarters building
We first heard back in late July that NVIDIA was looking to flex its growing clout in the chipmaking industry by potentially acquiring Arm Holdings from SoftBank. At the moment, NVIDIA is the most valuable U.S. chipmaker with a market cap of just over $300 billion, compared to $209 billion for the previous long-time leader, Intel.

Although we’ve heard plenty of additional rumors since the initial story broke — along with recent opposition from two of Arm’s co-founders — a new report from the Wall Street Journal states that SoftBank is “nearing a deal” that would see NVIDIA purchase Arm for around $40 billion. SoftBank, which purchased Arm in 2016 at a cost of $28 billion, would receive a nice return on investment in the cash and stock deal. SoftBank has been on a selling spree recently, and NVIDIA is seen as the perfect steward to take Arm off its books.

NVIDIA was once a company that was laser-focused primarily on graphics chips that power add-in graphics cards for PCs. However, over the years it has expanded to include Quadro GPUs for professional workstations and mobile chips for devices like the SHIELD TV and Nintendo Switch. Its fastest growing business, however, involves the highly lucrative data center and artificial intelligence/machine learning markets where its powerful GPUs are among the fastest on the market and command a hefty premium which adds greatly to NVIDIA’s bottom line.

Nvidia Jensen Huang 2
NVIDIA CEO Jensen Huang

Arm, whose chip architecture forms the basis of mobile chips designs from the likes of Apple, Samsung, MediaTek, Qualcomm, and countless others, would represent a major coup for NVIDIA’s efforts to control the future of mobile computing and every other market that Arm chips thrive in. Given the fact that Arm chips are used across countless sectors from smartphones, to tablets, to routers, to robotics, to wireless routers, there will most likely be antitrust concerns brought up with an NVIDIA deal.

SoftBank was considered to be a neutral party when it purchased Arm four years ago, so there were no questions about anticompetitive behavior at the time. However, given that NVIDIA currently competes with some of the same companies that heavily rely on Arm architecture, you can bet that companies like Apple and Qualcomm might have some serious reservations about this deal and would file formal protests.

"They are the semiconductor company that can buy Arm to destroy it—and it is very much in its interest to destroy Arm because they [would] gain a lot more than the $40 billion that they would pay for it," said Arm co-founder Hermann Hauser earlier this month. Another Arm co-founder, Tudor Brown, said back in August that the potential acquisition is “immediately going to upset that balance and make it very, very difficult for other companies to feel that they have equal access to the technology” and that NVIDIA could “deprive the other guys from having whatever innovations were to take place”. 

According to this latest report, SoftBank and NVIDIA could announce a deal as early as this coming week.