Nvidia’s Arm deal is dead

Nvidia has failed in its attempt to purchase UK chip manufacturer Arm from SoftBank Group (SBG) for $31bn. The deal would have seen Arm become a key part of Nvidia’s strategy to build out its hardware-based artificial intelligence (AI) acceleration business.

The parties agreed to terminate the agreement because of “significant regulatory challenges” preventing the consummation of the transaction, despite good faith efforts by the parties. Arm said it will now start preparations for a public offering.

In August, the Competitions and Market Authority (CMA) completed an initial investigation of the Nvidia-Arm deal and found that the transaction raised the possibility of a “substantial lessening of competition across four key markets” – datacentres, the internet of things (IoT), the automotive sector and gaming applications.

This initial investigation prompted digital secretary Nadine Dorries to ask the CMA to proceed with a Phase 2 investigation, looking into Nvidia’s takeover of Arm on national security and competition grounds.

Commenting on its failed acquisition attempt, Jensen Huang, founder and CEO of Nvidia, said: “Arm has a bright future, and we’ll continue to support it as a proud licensee for decades to come. Arm is at the centre of the important dynamics in computing. Though we won’t be one company, we will partner closely with Arm.”

SBG said Arm’s technology and intellectual property are at the centre of mobile computing and the development of AI. “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,” said Masayoshi Son, chairman and CEO of SoftBank Group Corp. “We will take this opportunity and start preparing to take Arm public, and to make even further progress.”

Although the deal has been terminated, Nvidia retains its 20-year Arm licence. “The significant investments that Masa has made have positioned Arm to expand the reach of the Arm CPU beyond client computing to supercomputing, cloud, AI and robotics,” said Huang. “I expect Arm to be the most important CPU architecture of the next decade.”

The termination of the deal also sees a change in the leadership team at Arm, with CEO Simon Segars, who spearheaded the acquisition, stepping down. His replacement as CEO, Rene Haas, previously led Arm’s IP Products Group since 2017, where, according to Arm, he increased investment in the industry’s largest software developer ecosystem as well as products for growth markets such as infrastructure and automotive.

Before joining Arm in 2013, Haas held several applications management, applications engineering and product engineering roles, including seven years at Nvidia as vice-president and general manager of its computing products.

“As the innovators of the industry’s most pervasive compute architecture, Arm changed lives around the globe by delivering the technology at the heart of the smartphone revolution,” said Haas.

“We are now uniquely positioned to address the diverse demands of AI, cloud, IoT, automotive and the Metaverse. And with the uncertainty of the past several months behind us, we are emboldened by a renewed energy to move into a growth strategy and change lives around the world – again.”