Arm Ltd, the semiconductor designer owned by SoftBank Group Corp, is attracting takeover interest from graphics chipmaker Nvidia Corp, people with knowledge of the matter said.
Nvidia in the past few weeks made an approach about a potential deal for Cambridge, England-based Arm, the people said.
Other potential bidders could also emerge, they said, asking not to be identified because the information is private.
SoftBank, led by billionaire Masayoshi Son, is exploring options to sell part or all of its stake in Arm through a private deal or public stock listing, Bloomberg News reported this month.
Nvidia’s interest might not lead to a deal, and SoftBank might still opt to pursue a listing, the people said.
A deal for Arm could become the biggest-ever acquisition in the chip industry, according to data compiled by Bloomberg.
Arm is owned by SoftBank and its US$100 billion Vision Fund. The Japanese group bought Arm, which at the time was the UK’s largest listed technology company, for about US$32 billion in 2016.
Since that deal, the Philadelphia Stock Exchange Semiconductor Index has rallied 185 percent as investors pour money into an industry they are betting would grow rapidly, fueled by new markets and technologies such as automotive and artificial intelligence (AI).
Shares of Nvidia have risen almost eightfold over the same period, giving it a market value of about US$254 billion.
They rose about 1 percent in New York trading on Wednesday.
The Santa Clara, California-based company has segued its dominance of graphics chips used by gamers into new areas such as data center AI processing, as well as a foothold in the nascent market for systems that would run self-driving vehicles.
Those moves have made the company a bigger threat to a broader range of companies, including Intel Corp, Qualcomm Inc and Advanced Micro Devices Inc — all of which license Arm’s technology. Earlier this month, Nvidia briefly surpassed Intel in market value.
SoftBank previously owned a stake in Nvidia, having quietly amassed US$4 billion of shares in 2017, people with knowledge of the matter said at the time.
The Japanese firm early last year said that the Vision Fund had sold off its entire Nvidia holding.
Arm sells semiconductor designs and also licenses the fundamentals of how chips communicate with software, known as an instruction set. That blueprint underpins much of modern electronics and is the core value of the company.
Even some companies that design their own chips, such as Apple Inc, use Arm’s instruction set.
As part of the sale process, SoftBank approached Apple to gauge its interest in acquiring Arm, people familiar with the matter said.
The firms had preliminary discussions, but Apple is not planning to pursue a bid.
That is because Arm’s licensing operation would fit poorly with Apple’s hardware and software business model.
There might also be regulatory concerns about Apple owning a key licensee that supplies so many rivals.
An Apple spokesman declined to comment.
Still, the Cupertino, California-based technology giant has a vested interest in the fate of Arm.
The chip designer’s technology is an important component of the more than 2 billion custom processors that Apple has shipped in iPhones and other devices over the past decade.
Mac computers are to start relying on the technology later this year.
SoftBank has been selling down some of its prized assets, including part of its stake in Alibaba Group Holding Ltd (阿里巴巴) and a large chunk of its holdings in wireless carrier T-Mobile US Inc.
The goal is to buffer cash reserves to help withstand the economic effects of spread of COVID-19.
It is also under pressure from Paul Singer’s activist investment firm, Elliott Management Corp, which has called on the company to boost stockholder value through buybacks and governance changes.
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