One of Britain’s most successful tech companies, Arm Holdings, is being sold by its Japanese owners for $ 40 billion ($ 31 billion) in a deal that could reshape the semiconductor landscape.
Nvidia, a US company, will pay SoftBank $ 21.5 billion in stock and $ 12 billion in cash for the chip designer, although the deal is still subject to regulatory approval in the UK and could do so. facing opposition from its rival new owners and from British politicians concerned about foreigners. takeovers.
Nvidia is expected to face tough conditions to protect jobs and the status of the Cambridge Headquarters as part of the deal.
Arm co-founder Hermann Hauser described the recovery as an absolute disaster and said it would destroy the company’s business model and result in job losses at its Cambridge headquarters and elsewhere in the UK. United.
Speaking on BBC Radio 4 on Monday morning, he said all promises made about jobs made no sense unless they were legally enforceable, highlighting the takeover of Cadbury by US company Kraft in 2010.
Mike Clancy, general secretary of the science and technology union Prospect, called on the government to intervene in a deal he called a worrying development.
If the UK tech sector is to thrive and create the jobs of the future here in Britain, we need our crown jewels to be owned and managed in a sustainable way that prioritizes investments in the workforce and in research and development.
It is not too late for the government to take a more practical approach to this deal and impose binding conditions to ensure a stable future for Arm that benefits the whole country.
SoftBank paid $ 32 billion for the company four years ago as part of a deal that pledged to keep the headquarters in Cambridge. It paid off a fortune for Arms executives as well, and this time around Arm employees will share $ 1.5 billion in Nvidia stock.
Founded in Cambridge in 1990, Arm specializes in microprocessors and dominates the global smartphone market. But its chips are also found in countless sensors, smart devices and cloud services.
Nvidia, based in California, is best known for graphics cards which are preferred in the video game industry. It has seen sales skyrocket during the coronavirus crisis, with gambling being a popular locked-out pastime.
Its products are also increasingly used for artificial intelligence and in data centers.
Jensen Huang, chief executive of Nvidias, said the deal would create the first IT company in the age of artificial intelligence, and vowed to keep Arm’s headquarters in Cambridge.
AI is the most powerful technological force of our time and has launched a new wave of computing, he said in a statement. In the years to come, billions of AI-powered computers will create a new Internet of Things that will be thousands of times larger than the Internet of People today. Our combination will create a fabulously positioned company for the age of AI.
Arm will remain based in Cambridge. We will develop this great site and build a world-class AI research center, supporting developments in healthcare, life sciences, robotics, self-driving cars and other fields. And, to attract researchers and scientists from the UK and around the world to do ground-breaking work, Nvidia will build a cutting-edge artificial intelligence supercomputer, powered by Arm processors. Arm Cambridge will be a world-class technology hub.
However, his move to Arm is unlikely to go unchallenged in the industry.
Arm licenses its technology to any company that wishes to purchase it, and its customers include Apple, Samsung, and Qualcomm, who in turn use it in their devices.
This gives Nvidia control over Arm’s technology that could be used to manufacture its own mainframe chips, doubling Nvidias’ strategy of buying technology from parts of the booming data center business. where she is not currently playing.
The Nvidias deal would also put Arm under the control of a US-based fighter amid a trade cold war between the US and China, which is rushing to develop a domestic semiconductor industry while US officials are seeking to stem its rise.
Geoff Blaber, vice president of research for the Americas at CCS Insights, said the deal will rightly meet huge opposition from Arms customers.
An acquisition by Nvidia would be detrimental to Arm and its ecosystem, Blaber said. Independence is essential to Arm’s continued success and once compromised, its value will begin to erode.
Nvidia started out as a graphics chip designer and has grown into products for areas such as artificial intelligence and data centers.
The acquisition of Arm will put Nvidia in even more intense competition with competitors in the data center chip market such as Intel and Advanced Micro Devices, as Arm has developed technology to compete with its chips.
Softbanks boss Masayoshi Son had announced Arm’s potential but was reducing its stakes in major assets to raise cash.
The deal will see SoftBank and the $ 100 billion Vision Fund, which owns a 25% stake in Arm, a stake in Nvidia between 6.7% and 8.1%.
SoftBank could also receive an additional $ 5 billion in cash or stock, depending on the business performance of the chip designers.
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