Nvidia ended months of rumors Sunday, announcing the $40 billion acquisition of Arm Holdings from Japanese mega-conglomerate SoftBank.

Under the deal, Arm will continue to operate out of its headquarters in Cambridge, England, and will retain its brand, open licensing, and customer neutrality.

While it remains to be seen how deeply Nvidia plans to integrate with Arm, the chipmaker plans to invest heavily in research and development, beginning with the construction of an Arm-based supercomputer on Arm's campus.

"We will expand on this great site and build a world-class [artificial intelligence] research facility, supporting developments in health care, life sciences, robotics, self-driving cars, and other fields," said Nvidia CEO and Founder Jensen Huang in a statement.

"AI is the most powerful technology force of our time and launched a new wave of computing," he added. "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."

Additionally, Nvidia has said it will open up some of its intellectual property to Arm licensing.

Despite Huang's mention of IoT, it's important to note that while Nvidia will acquire the bulk of Arm Holdings, SoftBank will retain Arm's IoT Services Group. And, after the deal closes, SoftBank will hold an "under" 10% stake in the combined company.

The acquisition comes at a time when Nvidia — best known for its GPU technologies — is rapidly expanding into new verticals including cloud, AI compute, and switching. Nvidia is also an existing Arm customer having licensed the chip designer's architectures for various products, including its mobile Tegra offering, which is famously used in Nintendo's Switch game console.

However, Nvidia's plans for an Arm-based supercomputer belie an interest in Arm's potential in the data center.

While Arm’s chip designs are used in nearly every mobile device today, the company’s portfolio now extends well beyond consumer electronics. The chip designer has developed architectures that run the gamut from ultra-low power chips for IoT to 128-core, 250-watt data center chips. In fact, Arm-based processors are now used by multiple public cloud providers, including Amazon, Microsoft, and Oracle.

"We know for sure that data centers and clouds are clamoring for the Arm microprocessor, the Arm CPU," Huang told Patrick Moorhead, principal analyst and founder of Moor Insights and Strategy, in an article contributed to Forbes. "Energy efficiency directly translates to computing capacity, computing throughput, and the cost of provisioning service.”

In the article, Moorhead expressed enthusiasm toward the deal.

"The Nvidia-Arm deal is not only the largest semiconductor deal by dollar volume at $40 billion, but I believe the one with the most significant impact," Moorhead wrote. "I think the deal 'fits like a glove' in that Arm plays in areas that Nvidia does not or isn’t that successful, while Nvidia plays in many places Arm doesn’t or isn’t that successful."

The massive deal is expected to face stiff scrutiny from regulators in multiple markets. The United Kingdom has already signaled it will watch the deal carefully, according to a report published by Reuters on Monday.

“We are investigating this deal further and ministers have spoken to the relevant companies,” a spokesman for U.K. Prime Minister Boris Johnson told Reuters. “The enterprise act provides the government with powers to intervene in mergers where they raise concerns about national security, financial stability, media plurality, and maintaining in the U.K. the capability to combat and to mitigate the effects of public health emergencies.”

Nvidia also needs regulatory approval in the U.S., China, and the European Union, which is expected to take approximately 18 months.

Moorhead anticipates that Nvidia's competitors will fight for regulators to enact special requirements for Nvidia to move forward, but argues that Nvidia and Arm operate on completely different business models.

"Arm licenses IP and Nvidia makes chips, two very different business models which, when combined, don’t appear to create a monopoly," he wrote. "Nvidia GPUs have 0% smartphone, 0% TV share, and a very small GPU IoT share. Arm has 0% data center GPU, 0% PC GPU market share, and small Chromebook GPU market share. Having watched Huang get quick approval for Mellanox, even in China, gives me confidence the company can hammer this one through."