SoftBank Group Corp. is on the cusp of inking a deal to sell British chip designer Arm Holdings to Nvidia (NVDA) for more than $40 billion, says the Wall Street Journal, citing people familiar with the matter.
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According to the report, the cash-and-stock deal currently being negotiated would value Arm in the low $40 billions, the people said. SoftBank snapped up Arm four years ago for $32 billion.
Meanwhile the Financial Times reports that the deal could be announced as soon as Monday.
According to Arm co-founder Hermann Hauser a sale to Nvidia would spell trouble for the company. He told the BBC “It’s one of the fundamental assumptions of the ARM business model that it can sell to everybody.”
Hauser continued: “The one saving grace about Softbank was that it wasn’t a chip company, and retained ARM’s neutrality… If it becomes part of Nvidia, most of the licensees are competitors of Nvidia, and will of course then look for an alternative to ARM.
Instead Hauser said he would prefer for Arm to become an independent company with the support of the UK government, telling the BBC that if the Nvidia deal goes ahead Arm “will become one of the Nvidia divisions, and all the decisions will be made in America, no longer in Cambridge.”
In July Arm announced plans to transfer its two IoT Services Group (ISG) businesses, IoT Platform and Treasure Data, to new entities that would be owned and operated by SoftBank.
“Upon completion of the proposed transfer, Arm will deepen its focus on its core semiconductor IP business and expects to continue collaborating with the new ISG businesses” the company said.
Meanwhile shares in Nvidia have more than doubled year-to-date, and the stock scores a bullish Strong Buy Street consensus. Its average analyst price target of $546 indicates a further 12% upside potential lies ahead.
Indeed, Nvidia’s new PC gaming GeForce graphics processing units, the 2nd gen GeForce RTX 30 Series – the 3090, 3080 and 3070 GPUs— all based on the company’s Ampere architecture- will soon be available for purchase.
The “30 series” offers gamers and game developers extra performance and flexibility and boasts GPUs with 3D rendering gaming engines, 3rd-gen tensor cores and increased ray-tracing capabilities. (See Nvidia stock analysis on TipRanks)
“Our sense is that Nvidia just crushed it with the RTX 3000 series which will ship in September in two high-end gaming SKUs (3070/3080) and a workstation class SKU (3090)” cheered Rosenblatt Securities analyst Hans Mosesmann on September 1. He has a $600 price target on the stock.
“We see Nvidia’s earnings power for FY23 (CY22) in the mid-teens, which we view as attainable as Nvidia continues to dominate all aspects of GPU acceleration, the secular shift in the data center to accelerated computing (through DPUs) is just getting started and will be a multi-year cycle with Nvidia being a market leader, and Nvidia continuing its leadership in the Gaming market” the analyst concluded.
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