Nvidia is said to be eyeing possible acquisition of ARM

ARM, the semiconductor designer owned by SoftBank Group, is attracting takeover interest from graphics chip maker Nvidia, people with knowledge of the matter said.

Nvidia made an approach in recent weeks about a potential deal for Cambridge, England-based ARM, according to the people. Other potential bidders could also emerge, the people said, asking not to be identified because the information is private.

SoftBank, led by billionaire Masayoshi Son, is exploring options to sell part or all of its stake in ARM through a private deal or public stock listing. Nvidia’s interest may not lead to a deal, and SoftBank may still opt to pursue a listing, the people said.

A deal for ARM could become the biggest-ever acquisition in the chip industry. ARM is owned by SoftBank and its US$100-billion Vision Fund. The Japanese group bought ARM, which at the time was the UK’s largest listed technology company, for about $32-billion in 2016.

Shares of Nvidia have risen 76% this year through to Tuesday, giving the company a market capitalisation of about $254-billion. It’s been benefiting from fast-growing demand from data centres and artificial intelligence applications. Earlier in July, Nvidia briefly surpassed Intel in market value.

Representatives for SoftBank, ARM and Nvidia declined to comment.

Instruction set

SoftBank previously owned a stake in Nvidia, having quietly amassed $4-billion of shares in 2017, people with knowledge of the matter said at the time. The Japanese firm said in early 2019 that the Vision Fund had sold off all of its Nvidia holding.

ARM sells semiconductor designs and also licenses the fundamentals of how chips communicate with software, known as an instruction set. That blueprint underpins much of modern electronics and is the core value of the company. Even some companies that design their own chips, such as Apple, do so using ARM’s instruction set.

Any customer trying to acquire ARM would trigger regulatory scrutiny. Other companies using its technology would likely oppose a deal and demand assurances that a new owner would continue to provide equal access to ARM’s instruction set. Such concerns resulted in a neutral company — SoftBank — buying ARM the last time it was for sale.  — Reported by Liana Baker, Giles Turner, Dinesh Nair and Nabila Ahmed, (c) 2020 Bloomberg LP