Potentially the largest acquisition in semiconductor history faces plenty of obstacles.
After nearly two months of negotiations and press reports that a blockbuster deal was in the works, Nvidia this week announced a $40 billion agreement to buy ARM—the leading supplier of processor intellectual property (IP)—from financially struggling SoftBank in Japan. If approved, the deal would be the largest semiconductor acquisition in history, provided the additional $5 billion cash/stock payment is included for the business achieving financial targets. The acquisition, which is expected to take 18 months to complete (around March 2022), would top Avago’s 2015 deal to buy Broadcom for $37 billion, and SoftBank’s $32 billion purchase of ARM in 2016 (Figure 1).
ARM’s technology licenses and services generated $1.8 billion of revenue in 2019 and a little over $1.0 billion in the first half of 2020, but SoftBank decided to sell the business to help it climb out of huge losses from investments in technology startups. As part of the transaction, SoftBank is expected to take a stake in Nvidia (under 10% of its total stock)
