Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported.
The companies are negotiating terms, the newspaper reported, citing sources.
Softbank might take a stake in Nvidia after it buys Arm, the report said.
Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said.
The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private.
Nvidia is the only suitor in concrete discussions with Softbank, the sources said.
A deal for Arm could be the largest ever in the semiconductor industry, which has been consolidating in the past few years as companies seek to diversify and add scale.
However, any deal with Nvidia, which is a customer of Arm, would likely trigger regulatory scrutiny, as well as a wave of opposition from other users.
Cambridge, England-based Arm’s technology underpins chips that are crucial to most modern electronics, including those that dominate the smartphone market, an area in which Nvidia has failed to gain a foothold.
Customers including Apple Inc, Qualcomm Inc, Advanced Micro Devices Inc (AMD) and Intel Corp could demand assurances that a new owner would continue providing equal access to Arm’s instruction set.
Such concerns resulted in Softbank, a neutral company, buying Arm the last time it was for sale. It bought Arm for US$32 billion four years ago.
No final decisions have been made, and the negotiations could drag on longer or fall apart, the sources said.
Representatives for Nvidia, Softbank and Arm declined to comment.
“With Nvidia’s low-cost fabless model enabling it to focus on R&D, engineering and programming, the fit with Arm would be perfect,” Mirabaud Securities Ltd analyst Neil Campling said.
Nvidia is the largest maker of graphics processing units (GPU) and it is spreading the use of the gaming component into new areas such as artificial intelligence processing in data centers and self-driving vehicles.
Marrying its own capabilities with central processing units (CPU) designed by Arm could enable it to take on Intel and AMD in a more comprehensive way, Rosenblatt Securities Inc analyst Hans Mosesmann said.
He said that Nvidia would have to pay an estimated US$55 billion for Arm.
“You need control of both CPU and GPU roadmaps and this, of course, includes data centers,” he wrote in a note on Friday. “Strategically, Nvidia needs a scalable CPU that can be integrated into its GPU roadmap, as is the case with AMD and Intel.”
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