Nvidia, the computer graphics chip company, will pay $21.5 billion in stock and $12 billion in cash for Arm. SoftBank also may receive up to $5 billion in cash or stock if Arm hits certain financial-performance targets. Nvidia also will issue $1.5 billion in stock to Arm employees.
Under the deal, SoftBank will have an ownership stake in Nvidia of under 10%.
SoftBank purchased U.K. chip-designer Arm for $32 billion four years ago.
Nvidia shares jumped 8.51% to $527.98 in trading Monday. SoftBank shares rose in Tokyo, closing 9% higher.
Arm's technology goes into chips powering billions of devices shipping each year - everything from smartphones to video cameras to hard drives to washing machines.
“It’s a company with reach that’s just unlike any company in the history of technology,” Nvidia CEO Jensen Huang said in an interview with Bloomberg. “We’re uniting Nvidia’s leading AI computing with Arm’s vast ecosystem.”
“AI is the most powerful technology force of our time and has launched a new wave of computing,” Huang said in a statement. “In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people. Our combination will create a company fabulously positioned for the age of AI.
Nvidia said in a press release late Sunday that the transaction will be immediately accretive to the company's non-GAAP gross margin and non-GAAP per-share earnings.
Arm is expected to remain headquartered in Cambridge, England.