Under the terms, Nvidia will pay SoftBank $12 billion in cash, and $21.5 billion in Nvidia stock, with $5 billion placed under an earn-out clause. Nvidia is not purchasing the IoT services part of Arm.
"Simon Segars and his team at Arm have built an extraordinary company that is contributing to nearly every technology market in the world," Nvidia founder and CEO Jensen Huang said.
"Uniting Nvidia's AI computing capabilities with the vast ecosystem of Arm's CPU, we can advance computing from the cloud, smartphones, PCs, self-driving cars and robotics, to edge IoT, and expand AI computing to every corner of the globe."
The companies said Arm would stay in Cambridge, and Nvidia would issue $1.5 billion in equity to Arm employees.
"Arm's business model is brilliant. We will maintain its open-licensing model and customer neutrality, serving customers in any industry, across the world, and further expand Arm's IP licensing portfolio," Huang said.
"Nvidia will retain the name and strong brand identity of Arm."
The purchase is expected to be immediately accretive to Nvidia's earnings and is expected to take 18 months to close.
The deal needs regulatory approval in the UK, China, US, and EU.
In a call with journalists, Huang said the companies were "completely complementary".
"Nvidia doesn't design CPUs, we have no CPU instruction set, Nvidia doesn't license IP to semiconductor companies, so, and in that way, we're not competitors. We have every intention to add more IP tools and also unlike Arm, Nvidia does not participate in the cell phone market," he said.
"Our intention is to combine the engineering and the tech -- the R&D capacity of both companies so that we can accelerate the development of technology for Arm's vast ecosystem, and one of the areas ... that we very interested in, is to accelerate the development of server CPUs."
Updated at 11:21am AEST, 14 September 2020: Added additional comment.