As was widely expected, US graphics and computing firm Nvidia Corp has dropped its purchase of UK chipmaker Arm from SoftBank Group for $40 billion after it made no progress in winning the regulator's approval. SoftBank, for its part, is said to be getting down for an initial public offering from Arm as an alternative to the Nvidia takeover. The Financial Times (paywalled), which reported that the deal was off, said the Arm's IPO could be worth as much as $80 billion.
The purchase by Nvidia, if it had been approved, would have been the biggest semiconductor deal in history. But ever since it was announced in September 2020, it has been receiving fierce backlash from regulators as well as the chip industry.
The US Federal Trade Commission sued to stop the transaction last year on the grounds that Nvidia would become too powerful if it gained control over Arm’s chip designs.
Nvidia is one of the world's largest computing companies, while Arm creates and licenses microprocessor designs and architectures.
Arm CEO to quit
The nixing of the deal has meant that Arm CEO Simon Segars will resign and the incumbent president Rene Haas will take over from him, according to the FT report. Arm dominates the global smartphone market and its technology has been used in more than 180 billion chips shipped worldwide. Arm-based processors currently dominate the mobile computing landscape courtesy of Qualcomm’s Snapdragon line.
The deal was to combine Nvidia’s leadership in artificial intelligence with Arm’s vast computing ecosystem. Nvidia also assured to expand Arm’s R&D presence in Cambridge, UK, by establishing a world-class AI research and education center, and building an Arm/Nvidia-powered AI supercomputer for research.
It was not just the US authorities who were not impressed with the deal. The UK’s Competition and Markets Authority (CMA) also raised competition concerns over Nvidia-Arm move.
The CMA said it was worried the deal would stifle innovation in several areas, such as data center, gaming, Internet of Things (IoT) and self-driving cars, and called for a more in-depth investigation into the takeover.
The failure of the venture may, however, be welcomed by the likes of Intel, Qualcomm and Huawei for obvious reasons.
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