Graphics card maker Nvidia has agreed to purchase semiconductor and software design company Arm for $40 billion.
The deal will see Nvidia acquire Arm from current owner Softbank for a total of $21.5 billion in common stock and 12 billion in cash, which includes $2 billion payable at signing. Softbank may also receive up to $5 billion in cash or common stock under an earn-out construct if Arm meets certain financial performance targets.
Arm is best known for creating processor IP, AI solutions, and security technology. The company has also created development tools for accelerating the engineering of system-on-chip (SoC) architecture and software application development.
One of the company's biggest clients is Apple, which uses Arm-based processors in some of its most popular devices including iPhone, iPad, and Apple Watch.
Nivida said the deal will create a "premier computing company for the age of artificial intelligence," and plans to expand Arm's research and development presence in the UK by establishing a world-class AI research and education center in Cambridge.
It also intends to build an Arm and Nvidia-powered AI supercomputer for research purposes, and will continue operating Arm's open-licensing model while maintaining the global customer neutrality it claims has been "foundational" to the company's success.
"Uniting Nvidia's AI computing capabilities with the vast ecosystem of Arm's CPU, we can advance computing from the cloud, smartphones, PCs, self-driving cars and robotics, to edge IoT, and expand AI computing to every corner of the globe," said Nvidia founder and CEO Jensen Huang.
"This combination has tremendous benefits for both companies, our customers, and the industry. For Arm’s ecosystem, the combination will turbocharge Arm’s R&D capacity and expand its IP portfolio with Nvidia's world-leading GPU and AI technology."
The acquisition is expected to complete in approximately 18 months, subject to closing conditions and regulatory approval in China, the U.S., the European Union, and the UK.