Nvidia in $40bn acquisition of Arm; Oracle won contest for TikTok’s US business

Equities 3 minutes to read

Peter Garnry

Head of Equity Strategy

Summary:  Nvidia is making a bold and in our view correct $40bn bid for SoftBank Group's computer chip business Arm. It will cement Nvidia as one of the most influential and important computer chip makers in the world but put right in the middle of the US-China technology arms race. Oracle shares are up 9% in pre-mkt trading on the news that it has won the bid for TikTok's US business beating Microsoft to the finish line.


Yesterday SoftBank Group announced that it is selling its chip-design company Arm which is bought in 2016 to Nvidia for $40bn in deal financed with stock and cash. Arm has some of the world’s most important patents and chip-designs for semiconductors and the acquisition will cement Nvidia’s position as one of the leading computer chip manufacturers in 21st century. SoftBank Group shares were up 9% in Japanese trading and Nvidia shares are up 5% in pre-market trading.

14_PG_1
Source: Bloomberg

With the acquisition Nvidia is catapulted directly into the technology arms race between the US and China more than it already was. Arm has a lucrative business in China and the Chinese regulators could block that part of the acquisition as a key technology transfer from a more neutral country such as Japan to an American technology company could be viewed as a threat in Beijing.

Dusty database company Oracle gets social media flavour

Microsoft was long thought to end up being the winner in the bid to acquire TikTok’s US business which was forced by the White House to find an alternative operational model in the US. However, over the weekend Oracle announced that it had won the bid for TikTok’s US business by offering a partnership model instead of an outright purchase. Oracle will become a ‘trusted tech partner’ according to source whatever that means. Oracle has so far not released a press release so we do not know what the framework is other than the news says that the solution will be ‘secure’ for Americans. Oracle shares are up 9% in pre-market trading showing how a little sprinkle of social media can suddenly change the appeal for investors. We still find it weird that one of the most laser-focused enterprise software businesses in the US suddenly wants to enter the social media arena.

14_PG_2
Source: Saxo Group

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.