Nvidia to buy Arm Holdings in $40B deal

Yahoo Finance’s Zack Guzman and Dan Howley discuss Nvidia buying Arm Holdings from SoftBank in a deal worth $40 billion.

Video Transcript

ZACK GUZMAN: Meantime, also in the tech space, I want to highlight a big deal in the semiconductor space. Chip maker Nvidia agreed to buy Arm Holdings, a maker of chips for mobile phones-- SoftBank used to own them-- in a deal worth $40 billion. It's big news, and want to bring on Yahoo Finance's Dan Howley for more on what this means for the chip space. And Dan, it's a pretty good return for SoftBank.

DAN HOWLEY: Yeah, it really is. If you look at the way the chip space is now shaping up, it seems as though Nvidia is going to be an increasingly more dominant presence there. Right now, obviously, Intel is still the main player, despite the fact that they've been dinged for not really innovating as far as their chip design goes, and then reports that they were going to outsource their foundries. That's something that Nvidia already does and rival AMD already does.

With Arm, basically what Nvidia would be getting is the company that designs chips in low-power devices, including smartphones. That's absolutely massive, because a lot of those chips are then starting to work their way into PCs. We're seeing what are called always-on PCs from Windows or powered by Windows.

And, of course, Apple has announced that it's going to move away from Intel entirely for its own devices and lean on its own chips for computing based on Arm's design. So Nvidia is going to get its hands in all of these different places. And then on top of that, Nvidia will be able to use Arm to basically license out its own product design. So they're going to win both ways on this.

And then in the data center space, where Nvidia is increasingly seeing its revenue from, Arm will be a presence there as well. In fact, it was just this past quarter that Nvidia's data center division out earned its video game division, where it usually made its chops. So, obviously, this is going to be a big move for Nvidia going forward, and a bigger move for the chip space overall.

ZACK GUZMAN: Yeah, and I mean, with the wind at its back here, as Apple shifts its plans in the chip space as well. Obviously, that's a big customer, when we think about what Arm has ahead of it. And just to go back, SoftBank acquiring Arm back in 2016, $31.4 billion. And now, and this deal valued at $40 billion. Not bad for Masa Son. But Dan Howley, appreciate you bringing us that.