Nvidia is looking to expand its silicon empire as it rides the AI boom - the chipmaker is in discussions for a stake in the UK's Arm

• Nvidia is in discussions to acquire a stake in UK-based chip designer Arm before it goes public. 
• A stake in Arm will complement Nvidia's competencies as the world's top chipmaker, as it rides the AI boom.
• Nvidia previously tried to acquire Arm in 2020 – before US competition authorities blocked the move. 

Nvidia is looking to expand its microchip empire as it gathers resources to support the artificial-intelligence revolution.

The world's most valuable semiconductor firm is in talks to buy a stake in the SoftBank-owned British chip designer Arm, ahead of its planned initial share offering later this year, the Financial Times reported. While nothing has been finalized yet, Arm is looking for Nvidia to become a so-called anchor investor, the outlet said. 

Anchor investment is where an institution purchases a portion of a company's shares before it debuts on the stock market. It is a common tactic used in times of IPO downturn to provide a degree of certainty and reassure investors. 

Per the FT, negotiations are currently focused on the UK-based company's valuation, which Nvidia sees around $40 billion, while Arm is holding out for nearer to $80 billion.

A stake in Arm will likely complement Nvidia's competencies as the world's leading chipmaker, as it prepares to take advantage of the artificial-intelligence boom that has taken markets by storm this year. The Santa Clara-based firm's stock is the best performer on the S&P 500 index this year – its share price rocketed almost 200% so far in 2023, boosting the company's market value above $1 trillion.

Nvidia's stock rally has been driven chiefly by investor perception that the company is well positioned to take advantage of the ongoing AI frenzy. The company is the No. 1 producer of graphics chips needed for high-intensity AI computing.

This is not the first time Nvidia and Arm have crossed paths. In 2020, the former was on the verge of acquiring the UK firm in a $40 billion deal – but at the last moment, US competition authorities blocked the move over concerns about restricting access to Arm's chip designs. 

Now, as SoftBank unwinds its investment in the chipmaker, Arm is expected to go public as the most valuable company since EV carmaker Rivian debuted with a market capitalization of $66 billion in November 2021.