ARM Holdings is the semiconductor design company whose CPU processors are at the "core" of the chipsets used on many mobile devices. Currently owned by Japan's SoftBank, ARM is up for sale and the company that is considered the top candidate to purchase it is Nvidia according to Bloomberg. The latter is the world's largest producer of graphics processing units or GPU chips and was purchased by SoftBank in 2016 for $32 billion.
Will Nvidia end up purchasing ARM Holdings? Apple is apparently not interested in a deal
According to those familiar with the transaction, it could end up as the largest semiconductor deal in history. The sources cited by Bloomberg say that there is no guarantee that Nvidia will end up acquiring ARM as other bidders could surface and SoftBank could decide to spin off ARM and have it publicly traded on major stock exchanges. New Street Research LLP says that the company could be worth $44 billion if it pursues a public offering and might achieve a valuation as high as $68 billion by 2025. That's because ARM's technology and designs are used on connected devices, networking equipment, and more.
SoftBank CEO Masayoshi Son has recently started selling off some of its tech pieces including a large stake in T-Mobile. SoftBank purchased 78% of Sprint in 2013 after beating out Dish Network for the carrier. It received the T-Mobile stake in the latter's merger with Sprint. Son originally had high hopes for ARM saying at the time of its purchase by SoftBank that the acquisition of the British company was, "one of the most important acquisitions" that he had ever made. The two companies worked out a plan to increase spending on chip designs and on new hirings essentially expanding and investing in the company before slowing down the process ahead of returning to the public stock markets.
Nvidia, the possible suitor for ARM, has seen its valuation soar by a factor of more than 20 times over just the last five years alone. Earlier this month, the company was-for a brief moment-valued higher than Intel. The company's main claim to fame at one time was selling graphic chips employed by gamers. But now Nvidia has broadened its business into self-driving cars and AI data centers and is now valued at close to $250 billion.
While looking around for potential buyers for ARM, SoftBank reportedly approached Apple to see if it had any interest in the chip designer. Apple had just enough interest to sit down for a preliminary discussion, but people familiar with the matter said that at the end of the day, there was no interest on Apple's part. These anonymous sources noted that Apple and Nvidia are not a good fit; after all, there might have been some regulatory issues about Apple owning a company that supplies iPhone rivals with CPU cores. In addition, such a purchase might be the largest in Apple's history. The latter usually sticks to making small, strategic acquisitions. Previously, the largest deal ever announced by Apple was the $3 billion purchase of Beats Audio announced back in 2014. ARM is a very important company as far as Apple is concerned. The firm's CPU cores play an important role in Apple's custom chipsets.
A phone manufacturer like Apple would face plenty of scrutiny by regulatory agencies if it made a play for ARM, especially the ones that deal with antitrust issues. God knows that with the App Store at the center of an investigation, this would be the last thing that Apple needs at the moment. Other companies using ARM's architecture would oppose its purchase by a rival handset producer. There would be concerns about whether an acquirer would continue to allow rivals to access to ARM's instruction set. Simply put, the latter is what gives the CPU directions and gives it tasks to do.
It might be hard for SoftBank to find a buyer for ARM although Nvidia's interest appears to be serious.