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British chipmaker ARM faces possible sale to US graphics card maker Nvidia

Earlier this week, the head of ARM's owner SoftBank, Masayoshi Son, said the fund is considering selling ARM as part of a strategy to boost its cash balances and recover from a historic loss earlier in the year

NVIDIA Corporation - British chipmaker ARM faces possible sale to US graphics card maker Nvidia

ARM Holdings plc, a Cambridge-based semiconductor manufacturer hailed by some as a British corporate ‘success story’, could be taken over by US graphics processor maker Nvidia Corporation (NASDAQ:NVDA) in a multi-billion dollar deal with its current parent SoftBank Group.

In late July, the head of SoftBank Masayoshi Son said the Japanese investment fund is considering selling ARM as part of a strategy to boost its cash balances and recover from a historic loss earlier in the year amid the coronavirus pandemic.

SoftBank bought ARM in 2016 for around US$32bn as part of an aggressive investment strategy that has since been reigned in, so any sale is likely to come in above the number.

Founded in 1990 as a joint venture by Acorn Computers, Apple Inc (NASDAQ:APPL) and integrated circuit maker VLSI Technology Inc, ARM computer chips are now considered to be synonymous with smartphones and other mobile devices. It has also ballooned in value to become the UK’s most valuable tech company.

Companies using the firm’s chips include Apple, Samsung, Qualcomm and MediaTek, as the group will license its chips to anyone willing to pay, which can then be edited to the customer’s specifications.

While the discussion over the sale to Nvidia has generated significant market chatter, it may not be a done deal, with Son saying previously that ARM may be spun off and return to life as a listed company before 2023.

However, if Nvidia succeeds in acquiring the company its product line will broaden from its current focus on high end graphics processors, most of which are sold to PC gamers, science researchers and cryptocurrency miners due to their ability to process data-intensive tasks.

It may also fire a warning shot across the bow of some of Nvidia’s competitors, namely Apple, Broadcom and Qualcomm, who currently license ARM chips for their own uses and may fear Nvidia as a rising competitor in the space if the bid succeeds.

Shares in Nvidia were 0.6% higher at US$460.60 in pre-market trading in New York on Friday.

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