Why buy arm holdings

Ultimately, SoftBank has made a smart move on this deal. NVIDIA should profit easily, as it capitalizes on the rapidly growing use of Arm-designed chips in various products especially smartphones to create a supportive ecosystem, which could help fuel NVIDIA's expansion into large, high-growth markets. Technically speaking, SoftBank is selling its prized holding to itself, since it still gets to be in charge -- albeit on a significantly smaller scale than before.

So, in the end, SoftBank is able to pull in much-needed cash and does not need to lose all its stake in a company that not only performs very well but was also previously vaunted as a key building block to SoftBank's vision of our interconnected future. The tech stock giant may be on the long road to a distant future, but at the very least, this deal has all the facets of a winning move for the short term.

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Cost basis and return based on previous market day close. Investing Best Accounts. The UK prime minister's spokesman said "ministers have spoken to both companies", adding that the government would be scrutinising the deal "including what it means for the Cambridge HQ". ARM creates computer chip designs that others then customise to their own ends.

It also develops instruction sets, which define how software controls processors. It is based in Cambridge but also has offices across the world, including a joint venture in Shenzhen, China. Hundreds of companies license its innovations including Apple, Samsung, Huawei and Qualcomm.

To date, ARM says billion chips have been made based on its solutions. When Softbank acquired ARM, it promised to keep the company's headquarters in the UK and to increase the number of local jobs, which it did. Softbank's founder Masayoshi Son described the firm as being a "crystal ball" that would help him predict where tech was heading.

But losses on other investments, including the office rental company WeWork, prompted a rethink. California-headquartered Nvidia overtook Intel to become the world's most valuable chipmaker in July. Until now, it has specialised in high-end graphics processing units GPUs.

These are commonly used by gamers to deliver more detailed visuals, as well as by professionals for tasks including scientific research, machine learning, and cryptocurrency "mining". Mr Huang has already said that one of the changes he wants to make is to accelerate development of ARM's designs for CPUs used in computer servers - a rapidly growing sector.

Amazon is among companies that are already betting on the tech. But experts say one risk Nvidia faces is that the takeover could encourage ARM's wider client list to shift focus to a rival type of chip technology, which lags behind in terms of adoption but has the benefit of not being controlled by one company. Mr Blaber also suggested regulators might block the deal.

Mr Huang has said that he expects it to take more than a year to "educate" regulators and answer all their questions, but said he had "every confidence" they would ultimately approve the investment.

It's a deal which the man who founded ARM says is a disaster. Skip Navigation. Key Points. In this article. VIDEO Squawk on the Street. Invest in You: Ready.