Nvidia’s Blockbuster Arm Acquisition Is Officially Dead

Nvidia’s Blockbuster Arm Acquisition Is Officially Dead
Photo: Justin Sullivan, Getty Images

Nvidia’s $US40 ($56) billion bid to acquire Arm has officially ended, Softbank announced on Monday citing “significant regulatory challenges.”

The deal, announced in September 2020, faced regulatory scrutiny in the U.S., UK, and EU, and in December of last year, the U.S. Federal Trade Commission sued to halt the transaction, arguing that Nvidia would gain too much power purchasing a company whose chip designs are used in rival products and across various industries.

Also displeased with the blockbuster purchase were Nvidia’s rivals, some of which reportedly went so far as to actively work with regulators to crush the deal. Consumer tech heavyweights Microsoft, Qualcomm, Intel, and Amazon are among those who rely on Arm’s chip technology and took issue with the acquisition. Nvidia said Arm would “continue to operate its open-licensing model while maintaining its global customer neutrality,” but that promise failed to reassure its rivals.

Graphics giant Nvidia had hoped to close the deal within 18 months, or by March 2022, but a recent report Bloomberg report revealed that the AMD and Intel rival was instead on the brink of abandoning its plans. Now that Nvidia is officially walking away from the deal — as first reported by Financial Times — it will be forced, as part of the acquisition terms, to pay Arm owner Softbank $US1.25 ($2) billion for failing to close the transaction.

Softbank will miss out on Nvidia stock that, despite reports of this deal hitting rock blocks, has soared since the attempted purchase was announced. The transaction was initially worth around $US40 ($56) but skyrocketed to $US87 ($121) billion last November when Nvidia’s stock price peaked.

Nvidia and Softbank are wasting no time to make moves in the aftermath of the failure. A leadership change at Arm sees CEO Simon Segars replaced by Arm’s head of IP Rene Haas (who was formerly an Nvidia VP and general manager of its computing products business); the transition is effective today.

“[Segars] has decided that at this stage of his career, the time and energy required to take the company public and everything around that was not something he wanted to sign up to,” Haas told TechCrunch. “So he’s going to step down. I’m going to take over for him.”

Softbank is changing tactics and will reportedly unload Arm by pursuing an IPO within the next 12 months. Softbank prefers to list Arm on the U.S. stock market to score a higher valuation, according to Financial Times.

Nvidia’s acquisition of Arm was poised to be the largest purchase in the semiconductor industry and would have given the graphics card maker control over a company whose chip architecture is used in almost every gadget we use today, including cars, wearables, and phones.