Back in 2020, we had learned that American tech company Nvidia was due to buy SoftBank-owned British chipmaker Arm, for a whopping $40 billion. The expected closing date of the deal was March 2022, 18 months after the announcement had been made. It was supposed to be the largest deal in the semiconductor industry to date, eclipsing Avago’s acquisition of Broadcom in 2015. However, it seems that the record will not be broken yet, as the deal to acquire Arm has been called off.
Both Nvidia and Softbank announced the same in a joint statement, stating “significant regulatory challenges” as a reason. To clarify, the deal had drawn regulatory attention from across the globe.
A semiconductor and software design behemoth, Arm had been acquired by SoftBank in 2016 for $32 billion, which marked the largest foreign takeover by a Japanese firm at the time. If the deal had to take place, it needed to pass regulatory approvals from the UK, the European Union, the US, and China.
The US Federal Trade Commission in December sued to block the transaction, saying that it would give Nvidia too much control over computing technology and designs. The European Commission launched an investigation into the deal in 2021 as well. Now, what would have been a blockbuster deal and made history has completely fallen through.
Meanwhile, Cambridge-based Arm is having a change of guard at the top. Its current CEO Simon Segars will be leaving his post and will be succeeded by Rene Haas, the president of Arm’s IP group. ARM’s services are used by Apple, Qualcomm, and many other companies. Its processor tech is present in virtually all smartphones, most tablets and digital TVs, and a significant proportion of all chips with embedded processors.
If you are wondering what will happen to Arm now that the deal has been called off, the answer is simple – it will in all certainty, go public. Both SoftBank and Arm will start preparing for a public offering of Arm within the fiscal year ending March 31, 2023. SoftBank will also pocket the non-refundable deposit of $1.25 billion it had received at the time of signing the agreement, and it will be recognized as profit in the fourth quarter of the fiscal year ending March 31, 2022.
Additionally, the aborted deal will not put an end to Nvidia’s interest in Arm. According to Jensen Huang, Nvidia founder, and CEO, it will partner closely with Arm and continue to support it in the future.
