JAPAN’S Softbank is selling the UK’s Arm Holdings, whose technology powers most smartphones, to American chip company Nvidia.
The California-headquartered firm, known for its gaming graphics cards, recently overtook Intel to become the world’s most valuable chip manufacturer.
Nvidia CEO Jensen Huang said in a statement that the combined company will be pursuing developments in AI, healthcare, life sciences, robotics, and self-driving cars. “AI is the most powerful technology force of our time and has launched a new wave of computing,” he said.
The $40bn (£31.2bn) deal ends four years of Softbank ownership and Huang expressed hope that the move could lead to more UK jobs as an entity “for the age of artificial intelligence” was created.
But there are also fears — from Arm — that the opposite could be true. Co-founder Hermann Hauser said in an interview with BBC Radio 4 that the takeover was an “absolute disaster” that could destroy the company’s business model and lead to job losses.
Nvidia may have to meet legal conditions to prevent that, and to maintain Cambridge’s status as Arm’s headquarters, as part of the deal. It is understood that the city will remain the company HQ at least until September 2021. Softbank had made commitments to secure UK jobs and ministers are expected to impose conditions on the cash-and-stock takeover to ensure that those protections remains in place, and that decision-making stays in the UK.
The Japanese tech group will receive $21.5bn in common stock and $12bn in cash, making it the largest Nvidia shareholder. An extra $5bn cash bonus has been promised if chip designer Arm hits its financial performance targets, and Nvidia is expected to issue $1.5bn in equity to Arm employees.
Concern has also been raised about a possible conflict of interest, with some of Arm’s clients now beholden to a business that may be in competition with them for sales. Nvidia’s stated intention is to maintain “global customer neutrality”.
There are additional fears that the US may in future try to prevent Chinese firms accessing Arm intelligence, and that Brexit may affect some aspects of the deal.