Nvidia’s Arm deal crumbles under the weight of multiple investigations

8 Feb 2022

Image: © MichaelVi/Stock.adobe.com

Nvidia and SoftBank confirmed the termination of the Arm acquisition, which has faced multiple investigations since it was first announced.

After more than a year of roadblocks, Nvidia has cancelled its planned acquisition of UK chip designer Arm.

The deal, which was valued at $40bn when it was first announced in September 2020, would have led to Nvidia acquiring Arm from SoftBank Group.

But concerns were raised by the UK’s competition watchdog and then from the EU, before the US Federal Trade Commission (FTC) said it would sue Nvidia to block the deal.

Nvidia and SoftBank have now agreed to terminate the acquisition due to “significant regulatory challenges”.

“Arm has a bright future, and we’ll continue to support them as a proud licensee for decades to come,” Nvidia CEO Jensen Huang said yesterday (7 February). “Arm is at the centre of the important dynamics in computing. Though we won’t be one company, we will partner closely with Arm.

“I expect Arm to be the most important CPU architecture of the next decade,” he added.

SoftBank is now preparing to take Arm public over its next fiscal year, ending 31 March 2023. The Japanese conglomerate will retain the $1.25bn prepaid from the deal, while Nvidia will retain its 20-year Arm licence.

Masayoshi Son, CEO of SoftBank, said: “Arm is becoming a centre 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.”

Significant regulatory challenges

When the deal was first announced, Nvidia said that the transaction would combine the company’s AI computing platform with Arm’s ecosystem to create a stronger company for the age of AI.

However, both UK and EU watchdogs raised competition concerns over the deal, with the EU launching a full-blown antitrust probe into the transaction last October. A month later, the UK followed suit and ordered a 24-week investigation to be carried out by the country’s Competition and Markets Authority.

The UK and EU were concerned that the deal could potentially limit competition and innovation in the chip sector, giving too much market power to Nvidia.

Another potential roadblock loomed in China, with Chinese companies such as Huawei reportedly lobbying Beijing to block the deal.

By last December, the US took notice and added another blow with a lawsuit from the FTC. Despite opposition from multiple watchdogs, Nvidia had been confident that the deal would go through.

“Although some Arm licensees have expressed concerns or objected to the transaction, and discussions with regulators are taking longer than initially thought, we are confident in the deal and that regulators should recognise the benefits of the acquisition to Arm, its licensees and the industry,” Nvidia CFO Colette Kress said in August 2021.

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Leigh Mc Gowran is a journalist with Silicon Republic