Nvidia’s $40 billion deal to acquire Arm collapses, report

Nvidia’s $40 billion bid to acquire chip IP vendor Arm Holdings has reportedly collapsed after hitting regulatory roadblocks in the US and Europe, claims a Financial Times report based on input from three anonymous sources. Nvidia and Arm Holding’s parent company Softbank Group are yet to publicly confirm or refute the claims in the news article. 

Nvidia may have to pay a break-up fee of up to $1.25 billion to Softbank, FT reported. 

Several companies including Google, Qualcomm and Microsoft had raised objections over the deal amid concerns that Nvidia may block access to Arm’s mobile chip licenses to gain a competitive advantage over rival chip companies. Google’s new Tensor chip that powers the latest lineup of Pixel smartphones is based on the Arm architecture. 

In its defence, Nvidia had assured that Arm will continue to operate as a neutral technology supplier with an open licensing model.

The deal was under scrutiny in the US, UK and EU. In October 2021, the European Commission had opened an investigation arguing that the deal could lead to restricted or degraded access to Arm’s IPs. Two months later the Federal Trade Commission (FTC) challenged the deal on the grounds that it would give Nvidia too much control over a critical technology that its competitors rely upon. 

Founded in 1990 in Cambridge, UK, Arm Holdings is currently the market leader in chip design. Its design architecture is licensed by several companies including Qualcomm, Apple, and Samsung and is used in billions of smartphones, tablets, laptops, smart TVs, automobiles, and servers. Arm was acquired in 2016 for $31 billion by SoftBank Group, which wanted to reportedly strengthen its Internet of Things (IoT) division. 

The Nvidia-Arm deal was initially valued at $40 billion, however, it rose to $66 billion due to a boom in NVIDIA’s stock prices, according to Financial Times. The cancellation of the deal was a setback for SoftBank, which is now expected to unload Arm through an initial public offering (IPO) sometime in 2022. 

The FT report further claims that the collapse of the deal will result in a change of leadership at ARM. CEO Simon Segars is likely to be replaced by Rene Haas, head of the intellectual property unit.