Chipmaker Nvidia (NASDAQ:NVDA) has agreed to buy Arm Holdings (NASDAQ:ARMH), a designer of chips for cell phones, from SoftBank in a deal worth $40 billion U.S.
Japanese Softbank acquired Arm in 2016 for $31.4 billion U.S. in one of its largest acquisitions ever. Arm is best known as the designer of an architecture used in chips in most mobile phones, including the Qualcomm (NASDAQ:QCOM) chips used in nearly all Android phones, as well as Apple’s iPhone.
Nvidia, whose chips are widely used to support graphics and artificial intelligence applications, including for self-driving vehicles, pledged that it would "continue Arm’s open-licensing model and customer neutrality."
SoftBank bought Arm as an investment in the so-called Internet of Things -- the idea that wireless connectivity among everyday items such as refrigerators, cars and other devices would lead to useful new scenarios. However, the company is looking to raise cash to help start-ups it invested in through its Vision Fund, many of which have struggled during the coronavirus pandemic and subsequent lockdowns.
SoftBank’s finances have deteriorated this year as the company has lost money on investments in companies such as WeWork and Uber (NYSE:UBER). More recently, the company’s shares lost value as it was reported that it had taken some large stakes in tech giants, which have suffered a loss in stock market value in early September.
Nvidia has been booming this year due to a spike in video game usage during the pandemic. This week, Nvidia will launch a new graphics card for personal computers. The company projected 46% revenue growth for the third quarter in its last earnings report.
