Tech company Nvidia Corporation is at the stage of advanced talks to get Arm Limited under its wing. Arm Limited is the chip designer that SoftBank Group Corporation purchased for $32 billion four years back. According to sources, both parties are aiming to lock on a deal soon, and Nvidia Corporation is the only suitor who is spearheading the detailed discussions with SoftBank.

A deal for Arm Limited is perhaps the largest-ever deal in the semiconductor industry, which has been consolidating over the years as companies are looking forward to diversifying and add to the scale. However, any deal with Nvidia would likely mean regulatory scrutiny and a wave of opposition from other users.

NVIDIA buys ARM

NVIDIA Arm Acquisition Deal

Cambridge, England-based Arm’s technology creates chips that are crucial to most modern electronic products. These also include the ones that dominate the smartphone market- an area where Nvidia failed to earn a strong foothold. Customers like Apple Inc., Qualcomm Inc., Advanced Micro Devices Inc. and Intel Corporation may demand assurances about the new owner would continue offering equal access to Arm’s instruction set. It is because of concerns like these that SoftBank, a neutral company, had to buy Arm when it was up for sale. However, no decisions have yet been made, and the negotiations may either drag longer or fall apart as per sources.

SoftBank may also look for interest from other potential suitors if it can’t reach an agreement with the tech company Nvidia. Representatives for Nvidia, SoftBank and Arm, declined to comment on this.  “With Nvidia’s low-cost model enabling the corporation to focus entirely on R&D, engineering and programming, the fit with Arm will be a perfect one,” said Neil Campling, an analyst at Mirabaud Securities.

NVIDIA buys ARM for $32 billion

Nvidia Corporation is the largest maker of graphics processors and is entering into a new foray by spreading the use of gaming components into new areas like AI processing in data centres and self-driving cars. It is mixing its capabilities with CPUs that are designed by Arm and may enable it to take on Intel and Advanced Micro Devices in a substantial way.

Rosenblatt Securities analyst Hans Mosesmann estimates Nvidia Corporation would have to pay around $55 billion for Arm. “You need control of both the CPU and GPU roadmaps and also data centres,” he stated, referring to the CPUs and GPUs. “Strategically, Nvidia Corporation needs a scalable CPU which can be integrated into its GPU roadmap, like AMD and Intel.”

Billionaire Masayoshi Son has been selling a few SoftBank’s trophy assets as the company is looking forward to paying off its debts at the Japanese conglomerate. SoftBank has so far offloaded half its stake in Alibaba Group Holding Ltd. and also a section of holdings in T-Mobile US Inc. It has also explored options to exit a part or all its stake in Arm through a sale or public stock listing. The chip-design company may soon go public if SoftBank decides to take that step, according to sources.

Arm Limited has become a more valuable company as it pushes its architecture into smart cars, data centres as well as networking gear. The company can be of a worth $44 billion value if it pursues an initial public offering in 2021. That would be a valuation that may rise to $68 billion by the year 2025.

Nvidia Corporation is based in Santa Clara in California and is the largest graphics chipmaker in the world. The stock has increased more than twenty-fold in the last five years, thus enhancing the company to make more deals. Nvidia’s market value has also increased to more than $260 billion during that time, thereby surpassing Intel.