SoftBank would be the biggest investor in Nvidia if the deal goes through.
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Three major chip makers have stepped up to say they support Nvidia ‘s proposed acquisition of the U.K.-based chip-design house Arm.
Last September, Nvidia (ticker: NVDA) announced a deal to acquire Arm from SoftBank Group (SFTBY) for $40 billion in cash and stock in a transaction that would make SoftBank the largest investor in Nvidia. The deal has attracted considerable scrutiny from both regulators and other chip companies, given Arm’s position as a leading provider of microprocessor designs to the chip industry. Almost all smartphones use processors based on Arm designs.
But the U.K.’s Sunday Times over the weekend reported that three important Arm customers— Broadcom (AVGO), Marvell (MRVL), and Taiwan-based MediaTek (2454.TW)—have endorsed the transaction. All three companies have confirmed their support for the deal.
Broadcom CEO Hock Tan said in a statement that “Broadcom supports Nvidia’s proposed acquisition of Arm because Nvidia has assured the industry that it will increase the overall investment in Arm’s technology and that it will continue to make that technology available to the industry on a fair, reasonable and non-discriminatory basis.”
Marvell CEO Matt Murphy said “we see several benefits from a combination with Nvidia, including an acceleration of roadmaps for high-end CPU cores and the enablement of broader adoption of Arm-based designs in the industry. With the implementation of robust licensing policies that ensure equal and timely access and fair terms, Marvell is supportive of the transaction.”
And MediaTek CEO Rick Tsai said that “rhe semiconductor industry will benefit from the combination of Nvidia and Arm … We believe that the merger will enable MediaTek and other industry participants to bring more competitive and comprehensive products to the market place.”
Citi analyst Atif Malk wrote in a research note Sunday that the report is a big step forward for the proposed deal. He thinks the U.K. likely will approve the combination, given Nvidia’s public commitment to investing more in Arm’s U.K. operations. But he still sees considerable hurdles, in particular in China.
“With the U.S. continuing to be aggressive against China winning in a tech race, we see China less likely to support a deal that would see them potentially losing access to Arm,” he wrote in a research note. “If Nvidia finds a way to keep the Arm China subsidiary as a separate entity without access to any [graphics processor or artificial intelligence] IP then there is a path to get both U.S. and China regulatory approval.”
Malik says he says the path to approval remains narrow. He now sees a 30% chance of approval, up from a previous estimate of 10%.
Nvidia shares were up 4.4%, to $794.38 on Monday morning.
Write to Eric J. Savitz at [email protected]
