Nvidia and SoftBank have issued press releases stating that Nvidia’s purchase of ARM is cancelled due to “significant regulatory challenges”. This brings to an end a $40 billion deal that could have forever changed the future of the semiconductor industry.
The deal, which was announced in September 2020, was to be one of the largest in the industry, as once completed it would have turned Nvidia into a GPU manufacturer that would have under its control ARM, a company whose architecture and intellectual property are key to any technology company. ARM’s designs are relied upon by Qualcomm, whose Snapdragon chips power virtually all Android phones, and Apple, which uses them for the processors in its main products such as iPhone and MacBook.
Because of ARM’s importance to the entire industry, more than a few were wary of the possibility that Nvidia might turn it into a subsidiary. When Nvidia announced the purchase of ARM it promised that the company would maintain its independence and continue to license its products as before, but the mistrust was too great. For example, Qualcomm, Google and Microsoft disagreed with the deal, the European Commission launched an investigation and the Federal Trade Commission asked to block it.
After the failed sale, SoftBank will not stand idly by. The kabushiki gaisha bought ARM in 2016 for $32 billion and now expected to bring in $40 billion, so it will look for another way to raise that money. SoftBank has already communicated that its intention is for ARM to go public and is currently preparing to bring this operation to fruition. The question is where it will do it. ARM is a British company that in the past was listed on the London Stock Exchange, so the UK wants to bring it back.
Another effect of not buying ARM is the activation of a clause that will allow SoftBank to keep the $1.25 billion that Nvidia advanced. However, Nvidia is not leaving empty-handed. Not only will it retain ARM’s license for 20 more years, but the company’s new CEO happens to be Rene Haas, ARM’s hitherto head of intellectual property, who coincidentally was Nvidia’s vice president for seven years.