Two people familiar with the matter said on Saturday that SoftBank is close to reaching an agreement to sell British chip design company ARM to Nvidia . This transaction will not only raise billions of dollars in funding for SoftBank, but will also make the semiconductor industry a leading giant.
These people familiar with the matter said that the two sides are about to reach an agreement on a cash plus stock transaction, the transaction price may exceed 40 billion US dollars. However, they also said that the final details have not yet been finalized, and negotiations may still break down.
The transaction may also cause concerns from global antitrust regulators and ARM chip design customers. Including the iPhone, most smartphones in the world are designed with ARM chips.
Nvidia is one of the world’s largest computer chip companies, specializing in the production of powerful chips for computer graphics, data centers, automobiles and artificial intelligence. As of last Friday, the company’s market value exceeded $300 billion, and its stock is one of the best performing technology companies this year.
If the two parties reach an agreement to acquire ARM, SoftBank will make a net profit of billions of dollars, because SoftBank is seeking to sell assets to achieve business transformation. In 2016, Softbank spent 32 billion US dollars to acquire ARM, which is the company’s CEO Sun Zhengyi’s bold bet on the rise of global Internet devices.
When announcing the transaction, Sun Zhengyi said that the so-called Internet of Things is becoming “the biggest paradigm shift in human history.”
For Sun Zhengyi, behind this transaction is expected. A few months later, Sun Zhengyi announced SoftBank’s $100 billion Vision Fund. The fund’s mission is to acquire shares in promising start-ups in the technology sector, from Uber to WeWork to a company that uses robots to make pizza.
But these bets did not proceed exactly as he expected.
The Vision Fund was later criticized because it paid huge sums to sometimes problematic startups, causing SoftBank to lose nearly $13 billion in the fiscal year ended March 31. (The group stated that the Vision Fund returned to profitability in June.)
Moreover, ARM has not been as successful as SoftBank expected, sales growth has been relatively stagnant, and it has no ability to occupy a significant share of the IoT market.
A few months ago, SoftBank began to study the possibility of selling ARM or conducting an IPO.
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