NVIDIA-Arm Acquisition Officially Nixed, SoftBank to IPO Arm Instead
by Ryan Smith on February 8, 2022 6:00 AM EST
NVIDIA’s year-and-a-half long effort to acquire Arm has come to an end this morning, as NVIDIA and Arm owner SoftBank have announced that the two companies are officially calling off the acquisition. Citing the current lack of regulatory approval of the deal and the multiple investigations that have been opened up into it, NVIDIA and SoftBank are giving up on their acquisition efforts, as the two firms no longer believe it will be possible to receive the necessary regulatory approvals needed to close the deal. In lieu of being able to sell Arm to NVIDIA (or seemingly anyone else), SoftBank is announcing that they will instead be taking Arm public.
First announced back in September of 2020, SoftBank and NVIDIA unveiled what was at the time a $40 billion deal to have NVIDIA acquire the widely popular IP firm. And though the two companies expected some regulatory headwind given the size of the deal and the importance of Arm’s IP to the broader technology ecosystem – Arm’s IP is in many chips in one form or another – SoftBank and NVIDIA still expected to eventually win regulatory approval.
However, after 17 months, it has become increasingly clear that government regulators were not apt to approve the deal. Even with concessions being made by NVIDIA, European Union regulators ended up opening an investigation into the acquisition, Chinese regulators have held off on approving the deal, and US regulators moved to outright block it. Concerns raised by regulators centered around NVIDIA gaining an unfair advantage over other companies who use Arm’s IP, both by controlling the direction of its development and by their position affording NVIDIA unique access to insights about what products Arm customers were developing – some of which would include products being designed to compete with NVIDIA’s own wares. Ultimately, regulators have shown a strong interest in retaining a competitive landscape for chips, with the belief that such a landscape wouldn’t be possible if Arm was owned by a chip designer such as NVIDIA.
As a result of these regulatory hurdles, NVIDIA and SoftBank have formally called off the acquisition, and the situation between the two companies is effectively returning to status quo. According to NVIDIA, the company will be retaining its 20 year Arm license, which will allow the company to continue developing and selling chips based around Arm IP and the Arm CPU architecture. Meanwhile SoftBank has received a $1.25 billion breakup fee from NVIDIA as a contractual consequence of the acquisition not going through.
In lieu of selling Arm to NVIDIA, SoftBank is now going to be preparing to take Arm public. According to the investment group, they are intending to IPO the company by the end of their next fiscal year, which ends on March 23rd of 2023 – essentially giving SoftBank a bit over a year to get the IPO organized. Meanwhile, according to Reuters, SoftBank’s CEO Masayoshi Son has indicated that the IPO will take place in the United States, most likely on the Nasdaq.
Once that IPO is completed, it will mark the second time that Arm has been a public company. Arm was a publicly-held company prior to the SoftBank acquisition in 2016, when SoftBank purchased the company for roughly $32 billion. And while it’s still too early to tell what Arm will be valued at a second time around, it goes without saying that SoftBank would like to turn a profit on the deal, which is why NVIDIA’s $40 billion offer was so enticing. Still, even with the popularity and ubiquity of Arm’s IP across the technology ecosystem, it’s not clear at this time whether SoftBank will be able to get something close to what they spent on Arm, in which case the investment firm is likely to end up taking a loss on the Arm acquisition.
Finally, the cancellation of the acquisition is also bringing some important changes to Arm itself. Simon Segars, Arm’s long-time CEO and major proponent of the acquisition, has stepped down from his position effective immediately. In his place, the Arm board of directors has already met and appointed Arm insider Rene Haas to the CEO position. Haas has been with Arm since 2013, and he has been president of the Arm IP Products Group since 2017.
Arm’s news release doesn’t offer any official insight into why Arm is changing CEOs at such a pivotal time. But with the collapse of the acquisition, Arm and SoftBank may be looking for a different kind of leader to take the company public over the next year.
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Silver5urfer - Wednesday, February 9, 2022 - link
Do you understand English ? The point was about how node_13 was saying only issue is Software update and the point I mentioned was how garbage Android has been and how it's not having any issues running old software, like Google Apps all of them work. And how security doesn't even work. And battery being a bigger issue than a PC because of lack of parts and sealed design.Looks like you have some issues mate, like constantly mentioning about me which is completely irrelevant, not just this single instance but like every comment here you constantly mention it as if I'm living rent free in your head, and pulled some socketed thing into the point and assuming how I demanded a socketed phone. On that note, you know project that Google started ? ARA it had CPU blocks also modular entire thing got axed. Everything is possible if there is a way.
mode_13h - Wednesday, February 9, 2022 - link
> ARM going IPO means ... making changes dictating things around only on the basis of greed.Right, because Softbank is a charity.
I mean, I get the point that investors and therefore board members are too short-sighted, but there are plenty of private equity firms that don't exactly do a lot of good for the companies they buy.
> Also axed the entire fantastic tech of Optane
LOL. Optane was a fantastic promise, but the tech never managed to deliver. Why do you think Micron never brought any 3D XPoint products to market?
Silver5urfer - Wednesday, February 9, 2022 - link
Useless trash counterpoint. What is with the Charity mention ? IPO is only driven by investor power. You can wrap all kind of nonsense into that and say ton of things. A private entity operates differently than a public one.Optane is the best memory technology to exist. It destroys SLC technology to ash. They never materialized because how Intel didn't get them to mass produce properly and that needs more money and R&D which is not liked by Investors. It's now only an Enterprise technology. And consumers get trash QLC, PLC, and you laugh at Optane ?
mode_13h - Thursday, February 10, 2022 - link
> Optane is the best memory technology to exist.First, it underdelivered on its original promises and was way late. Second, its density is awful, which is the main reason it's so much more expensive than NAND flash. They haven't been able to scale it up to many layers. Third, it seems to burn more power than NAND flash.
So, it's only competitive when you need extreme low latency, at almost any price.
> and you laugh at Optane ?
No, I cry for Optane. I wish I could get an Optane SSD for my boot/OS drive, not that I really need it.
What I LOL'd at is your hyperbole. If Optane were more commercially viable, I think they'd have kept it going. You're just so biased in the way you see some things. Like as if the other side of the coin doesn't even exist.
amschroeder55 - Tuesday, February 8, 2022 - link
Hot take, but I think this is the worst possible outcome here. ARM isn't making enough money off of licensing to survive (there is a reason softbank wanted to sell), and an IPO is not going to generate anywhere near enough real internal resources to be able to compete with Apple, Intel or AMD in the long run. If ARMs stock holdings were actually close to class leading you wouldn't have seen Apple, Qualcomm, Samsung, Mediatek all spend huge development resources to diverge from their base offerings. I also don't have much faith that ARMs base designs are going to hold out much longer in server space, with other companies crushing it with either substantially modified variants or rise of newer architectures.I honestly believe getting sold to nVidia was the only way you could maintain some semblance of open access while also giving the resources needed to take the fight to other teams.
Clearly most people disagree there, but that's why it is a hot take.
amschroeder55 - Tuesday, February 8, 2022 - link
What I mean by IPO not generating resources is that stock price increase after set IPO doesn't make the company profit, and you can be darn sure Softbank will profit every cent it can from this leaving ARM in a shitty catch-22 with even less leverage than before.alfalfacat - Tuesday, February 8, 2022 - link
ARM makes more than enough money to survive, the reason Softbank wants to sell is because _they_ lost a ton of money on their WeWork and Uber investments and desperately need a cash infusion to shore up their balance sheet. Your hot take is just plain wrong.nunya112 - Tuesday, February 8, 2022 - link
thats only the start of their hemorrhaging of cash, pretty much most of SoftBank's investments are doing poorly.meacupla - Tuesday, February 8, 2022 - link
softbank buys and sells often. IDK why you would think ARM, which owns 100% marketshare for smartphones, would simply run out of money.Apple, Qualcomm, Samsung, Mediatek, etc. use customized SoC designs to meet their specific design goals. It's not because ARM doesn't offer a good base design.
ARM server, and PC market share was never good to begin with. And what exactly is the problem with a specialized ARM SoC design for servers taking over the base design? If it sells well, then ARM will benefit from licensing and royalties of those ARM server sales.
Doug_S - Tuesday, February 8, 2022 - link
Apple is not using "customized SoC designs" like the rest, they are designing their own cores and not using ARM cores. Qualcomm will be doing the same once the Nuvia core is ready. They are doing that specifically because ARM's base designs aren't good enough, or at least not as good as they could be.