Eric Savitz at Barron's:
Published: July 31, 2020 at 11:29 a.m. ET
There’s growing chatter that the graphics chip giant Nvidia is taking a serious run at buying the U.K.-based semiconductor design company Arm Holdings from SoftBank Group, which had acquired Arm in 2016 for $32 billion.
Both the Financial Times and Bloomberg are reporting that the two companies are in talks about a deal that would bring SoftBank (ticker: 9984.Japan) more than its original purchase price for the company. Earlier this month, there were multiple reports that SoftBank was considering a sale or initial public offering for Arm, and there is reason to believe that an IPO could value the company north of $40 billion. This is the second round of reports suggesting Nvidia (NVDA) might be a buyer, and the new reports don’t add much detail.
SoftBank, Nvidia, and Arm have declined to comment on the reports.
Arm doesn’t manufacture or sell chips—instead, the company creates processor designs that it then licenses to companies like Nvidia, Marvell Technology Group (MRVL), Broadcom (AVGO), and others. Arm-based processors power 95% of the world’s mobile phones and tablets. The company also designs processors for PCs.
Apple (AAPL) recently announced plans to shift its Mac personal computers to internally designed Arm-based chips and away from Intel (INTC) processors. An Nvidia acquisition of Arm would almost certainly bring objections from other licensees who view Nvidia as a competitor.
In announcing the Arm acquisition in 2016, SoftBank CEO Masayoshi Son said he expected the company to become a key driver in the Internet of Things (IoT), a major focus for the $100 billion SoftBank Vision Fund, a venture-capital portfolio launched the same year. Last year, Arm CEO Simon Segars told me in an interview that Arm was likely to return to the public markets in 2023........MORE
