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Nvidia acquires Arm Holdings from Softbank in $40B deal

Yahoo Finance’s On the Move panel discuss Nvidia’s record $40 billion dollar deal to buy SoftBank’s Arm Holdings.

Video Transcript

JULIE HYMAN: So let's switch to one of the other big deals that we're watching today, and this one is an actual acquisition, right? We know the details of this one. Nvidia is buying Arm Holdings from Softbank for $40 billion. It's Nvidia's largest deal. Nvidia, by the way, already surpassed Intel in terms of market cap this year, because the stock has really been skyrocketing. Jared, Nvidia primarily known as a graphics chipmaker, it's adding more smartphone chips with this acquisition. And it's an interesting deal for the company.

JARED BLIKRE: Yeah, it is on a number of fronts. It's also, it would be the largest deal in the chip space to ever get done. And there is some, it's not a done deal that it does pass regulatory scrutiny, because that has to be done not only in the US, but in China. And given the present tensions, especially just talking about the US ByteDance and TikTok deal, it remains to be seen whether we will actually see this. But yes, so Nvidia is the biggest player in the data center space.

It also gives them some synergies with their GPU business. And overall, I mean, the analyst commentary has been somewhat positive, but not all around. Basically, the biggest downside here is probably the anti-trust regulatory concerns. And Raymond James is saying there are two justifications for the deal. An assault on Intel and AMD's server business, and adding Nvidia's intellectual property to Arm's licensing business. So synergies around. We'll have to see if it gets done.

DAN HOWLEY: Yeah Jared, this is a deal that could really crush Intel in the long run, because what they're trying to do at Nvidia, is move companies away from using CPUs, or at least Intel and AMD CPUs, and then use Nvidia GPUs use in their data centers, especially when it comes to AI. Now they don't make CPUs, but they could with Arm's technology. And that's kind of where it goes, because Arm is a CPU maker, not a graphics processing maker.

And the reason why graphics processing is so coveted for AI, is because it can simply do more than a CPU can. And that's something that Nvidia jumped on after researchers kind of found that out. So I think in the long run, what you'll see here is obviously, more Nvidia products getting used for licensing, which would be a huge business for them, but we could also see an increase of Nvidia in the data center space, and that in the long run, would be so, so detrimental to Intel.