Nvidia Cancels $40B Acquisition of SoftBank’s Arm After Regulator Pushback
Nvidia has halted plans to purchase British semiconductor design firm Arm from SoftBank for $40 billion almost a year and a half after first announcing the acquisition. The two tech giants cited looming regulatory hurdles in both the U.S. and Europe as insurmountable obstacles to the plan.
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Nvidia and Arm shared plans for the acquisition in the fall of 2020, with an eye toward closing the deal in March of 2022. Since then, the U.S. Federal Trade Commission had already said it would sue to block the merger, in court as a violation of monopoly laws. That’s also why European Union antitrust investigators were raising questions. The idea of top GPU and AI processor manufacturer Nvidia adding Arm’s ubiquitous chips to its portfolio had alarmed rivals and regulators alike. Arm CEO Simon Segars resigned following the acquisition failure. Arm’s intellectual property group president Renee Haas, himself a former Nvidia vice president of computing products, has taken up the role as Arm looks toward going public in the next year or so as the backup plan to the purchase. Softbank, which purchased Arm in 2016 for $32 billion, seemingly still has plenty of faith in the company overall, just not that it can leap over every objection to Nvidia’s bid.
“Arm is becoming a center of innovation not only in the mobile phone revolution, but also in cloud computing, automotive, the Internet of Things and the metaverse, and has entered its second growth phase,” SoftBank Group CEO Masayoshi Son said in a statement. “We will take this opportunity and start preparing to take Arm public, and to make even further progress.”
Nvidia has a 20-year license deal with Arm already. The growing size and number of Nvidia projects demand ever-more processing power, especially the interactive virtual worlds of the metaverse. With two decades of tech and hundreds of millions of dollars invested in the metaverse, Nvidia’s desire to bring the chip creation in-house makes plenty of sense. The acquisition failure doesn’t mean Nvidia and Arm won’t keep working together, either. Nvidia will still license Arm’s chips, even if it won’t own them outright. SoftBank also gets to keep a $1.25 billion consolation prize as part of canceling the contract.
“Arm has a bright future, and we’ll continue to support them as a proud licensee for decades to come,” Nvidia CEO Jensen Huang explained. “Arm is at the center of the important dynamics in computing. Though we won’t be one company, we will partner closely with Arm. The significant investments that Masa has made have positioned Arm to expand the reach of the Arm CPU beyond client computing to supercomputing, cloud, AI and robotics. I expect Arm to be the most important CPU architecture of the next decade.”