Just over a week after word emerged that Nvidia Corp. is looking to buy Arm Ltd., a pair of new reports today have provided an update on the negotiations, saying a deal could be struck soon with a price tag potentially exceeding $32 billion.

U.K.-based Arm provides chips designs that have been implemented in billions of devices worldwide. Its customers include Apple Inc., Qualcomm Inc. and numerous other tech firms, including Nvidia. Arm was acquired by Japanese tech giant SoftBank Group Corp. in 2016.

Sources told Bloomberg today that Nvidia is in “advanced talks” with SoftBank to buy Arm, elaborating that executives are aiming to close a deal within weeks. But the sources cautioned the negotiations could still fall through or take more time to conclude.  

Two insiders also spoke to the Financial Times, which reported that a potential deal could see Nvidia offer more than $32 billion in cash and stock. SoftBank paid about $32 billion for Arm when it bought it in 2016. 

Based on the reports, it’s possible a deal may not net the Japanese tech giant a significant premium over what it invested to buy Arm four years ago. But that Nvidia may reportedly pay for the acquisition in cash and stock suggests there might be a future upside for SoftBank even at a $32 billion deal valuation. Nvidia’s stock has nearly tripled since 2016, which means the value of the shares included in any future acquisition offer could increase over time.  

Buying Arm may pay significant dividends for Nvidia as well. Whereas Nvidia’s hallmark graphics chips are mainly used in personal computers and data centers, Arm chip designs power a far larger variety of devices ranging from industrial sensors to handsets. A deal would give Nvidia a presence in all the markets where the British chip designer operates.

Of particular note is the handset market, where Arm technology powers the iPhone, iPad and countless Android phones.

Arm chip designs are also increasingly finding use in the data center. Nvidia grew its data center presence last year by shelling out $6.9 billion for Mellanox, a network equipment maker, and another big acquisition could speed up its expansion strategy in this market. A deal with SoftBank would put Nvidia in a position to more take on Intel Corp., since Arm designs can be used to make central processing units for servers. 

But the acquisition could face regulatory obstacles after it’s signed.  “Getting it approved would be challenging but not insurmountable,” analyst Patrick Moorhead of Moor Insights & Strategy told SiliconANGLE last week. Observers have also noted that given how Nvidia is a customer of Arm, other Arm customers might oppose the deal over concerns that their access to the chip designer’s technology might be curbed. 

SoftBank, for its part, appears to be prepared for the possibility that the negotiations will fall through. Company executives have reportedly weighed the option of taking Arm public sometime next year. 

Photo: Nvidia