LONDON — U.S. graphics chip maker Nvidia said it plans to buy U.K.-based Arm Holdings in a deal worth up to $40 billion, in a move that would create a global powerhouse in the industry.
The deal, announced late Sunday by Nvidia and Arm’s parent company, Japanese technology giant SoftBank, raises concerns about the independence of Arm, one of Europe’s most important tech companies.
The vast majority of the world’s smartphones run on Arm’s chip designs, and it’s a vital supplier for companies such as Apple and Samsung. It’s also an innovator in chip technology that can power artificial intelligence for connected devices such as medical sensors, known as the “Internet of Things.” The company’s business centers on designing chips and licensing the intellectual property to customers, rather than chip manufacturing, for which it relies on partners.
Being owned by a U.S. company could mean Arm is exposed to U.S. government export bans at a time when Washington is in a battle for tech supremacy with China.
Under the terms of the deal, Santa Clara, Calif.-based Nvidia will pay SoftBank $21.5 billion in stock and $12 billion in cash. SoftBank could earn a further $5 billion if Arm hits performance targets while Arm employees will get $1.5 billion worth of Nvidia shares.
Nvidia shares jumped more than 6% on news of the deal.
SoftBank bought Arm for about $32 billion in 2016, in a deal that sparked fears one of Britain’s most successful tech companies would succumb to a foreign takeover. To allay the concerns, the British government got SoftBank to agree to keep Arm’s headquarters in the U.K. and double its British staff over five years.
Nvidia CEO Jensen Huang said the U.S. company still plans to keep Arm based at its headquarters in Cambridge, England, where it will also build an artificial intelligence research center.
“Together we’re going to create the world’s premier computing company for the age of AI,” Huang told reporters.