NVIDIA Gives Up On its $40 Billion Acquisition of Arm

Posted on February 8, 2022 by Laurent Giret in Hardware, Mobile with 9 Comments

NVIDIA has abandoned its plans to purchase chip designer Arm Ltd. from SoftBank. A previous report from Bloomberg suggested that the $40 billion deal may fall through due to regulatory scrutiny, and this has now been confirmed by NVIDIA and Arm owner SoftBank Group today.

“NVIDIA and SBG have agreed to terminate the agreement on February 8, 2022 because of significant regulatory challenges preventing the consummation of the Transaction, despite good faith efforts by the parties,” SoftBank wrote in the press release. The Japanese company will receive $1.25 billion from NVIDIA due to the deal falling through, and SoftBank Group also announced today a new plan for a public offering of Arm within the fiscal year beginning on April 1.

According to a report from TechCrunch, Arm CEO Simon Segars is also leaving the company and will be replaced by Rene Haas, the current president of Arm’s Intellectual Property Group. Notably, Haas is also a former VP and General Manager of NVIDIA’s Computing Products Business Unit.

The Arm brand may not sound very familiar to the general public, but the company actually plays a key role in the tech industry as its chip designs can be found in smartphones tablets, PCs, servers, cars, and many other products. A leading GPU manufacturer such as NVIDIA taking control of Arm would have had serious consequences for Arm customers which include Microsoft, Google, Apple Qualcomm, Samsung, and many other high-profile tech companies.

Since NVIDIA announced its plan to acquire Arm back in September 2020, the company faced various hurdles starting with the UK government threatening to intervene on national security grounds (Arm is a UK-based company). After the US Federal Trade Commission sued to block the acquisition back in December 2021, it seemed like the writing was already on the wall.

If NVIDIA won’t be spending $40 billion to acquire Arm, the two companies will keep collaborating closely going forward. “Arm has a bright future, and we’ll continue to support them as a proud licensee for decades to come,” said Jensen Huang, founder and chief executive officer of NVIDIA. “Arm is at the center of the important dynamics in computing. Though we won’t be one company, we will partner closely with Arm.”

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Comments (9)

9 responses to “NVIDIA Gives Up On its $40 Billion Acquisition of Arm”

  1. crunchyfrog

    I figured they head a LEG up on buying ARM but I guess they lost their HEAD in the process.

  2. nine54

    Softbank's acquisition of ARM must have involved some interesting stipulations if the U.K. government can block the sale of a company owned by Japanese multi-national. Not that this was the only reason for Nvidia and Softbank ending the deal.

    • ezzy

      I never understood that reasoning. ARM, a UK company, is already owned by a Japanese company. How does an American company buying it make it a National Security issue for the UK? It always sounded like a really weak argument.

      • bkkcanuck

        Japan is a trusted security partner... hence... the stipulations added. Those stipulations were able to be executed at the pleasure of the UK government. One of the security requirements is not only who owns it but making sure it stays with the same licensing model so there government has choices of multiple possible suppliers. nVidia business model is fundamentally different than ARM and in fact the nVidia business model has a conflict of interest - since they make money from being a proprietary supplier not a supplier of IP. They could have ignored that and hoped that nVidia kept it's promises and did not reserve the best IP for itself (future development)... but we have seen how trustworthy some companies are with relying on that (not much). There is no real benefit to allowing the sale to nVidia, while there are lots of risks. If ARM is important to nVidia, they can design improvements and submit those changes to ARM for inclusion in the IP (Apple and Fujitsu have). The only reason I can see for nVidia to really want to get control of ARM is because they would make more money by pushing the limits of what they were committed to (something nVidia I believe has done in the past).

  3. ebraiter

    Not bad, "lost" out on the $40 billion acquisition but still get $1.25 billion. Pocket change...

  4. bkkcanuck

    Best ending we could hope for. nVidia proprietary model and ARM IP licensing model are incompatible. It is best that ARM go the IPO route, though to get ready it will take many years (years they lost waiting for acquisition).

  5. scovious

    Should important technology assets be owned by banks, or by technology companies? I think the answer is obvious, but politicians gotta' politic, you know.

    • bkkcanuck

      What you said makes no sense. Public companies are widely held (nVidia is a public company, so ARM will be as well). Those that own the company are shareholders, each of these companies will have a lot of the same registered shareholders (Funds/Investment Pools, Institutional Investors, ETFs, Hedge Funds)... ARM will likely start out with the same management team as they have now, same employees etc. (though they might get a new CFO). ARM is as much a technology company as nVidia is - and will continue to be once it has IPOd.

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