Nvidia said to be thinking of buying Arm from Softbank

There are further signs that Softbank wants to flog UK mobile chip designer Arm to compensate for its reckless investment strategy.

Rumours of the potential sale of Arm emerged last week, courtesy of the WSJ. Now Bloomberg has tapped its own moles to reveal that chip-maker Nvidia recently made an approach regarding a potential deal. Having said that, everything’s still up in the air and Softbank might not even end up flogging Arm, but the anecdotal evidence indicates it’s increasingly likely it will.

Nvidia’s shares are on a tear at the moment, having doubled since the great coronavirus sell-off in March, giving it a similar market cap to hated rival Intel. That means it has plenty of equity to play with if it wanted to get into the mega M&A game. Much of that growth has been driven by Nvidia’s strong position in the datacentre and AI chip space, some of which will rest on Arm chip designs.

The biggest challenge Softbank will face in its bid to sell Arm will probably be competition authorities, rather than finding a buyer. Arm chip designs have become commonplace in datacentres, so having them owned by a player in that space would risk having the technology denied to its competitors.

The same applies to smartphone vendors and smartphone component makers. The Bloomberg story says Softbank approached Apple too, but the gadget giant passed because it doesn’t want to get into the hardware licensing game. The fact that it would have faced intense regulatory scrutiny probably played a part too. For the same reason we would be surprised to hear Qualcomm was in the mix, although it would be amusing to see the look on the Apple CEO’s face if it was.