Nvidia calls off US$40 billion Arm acquisition

Nvidia’s acquisition of chipmaker Arm has been called off. 

Nvidia had agreed a landmark deal to acquire Arm for US$40 billion in September 2020, but regulatory pushback has seen the acquisition scrapped. As per the terms of the initial agreement, Nvidia will pay Arm’s parent company SoftBank US$1.25 billion for the deal falling through. 

Regulatory hurdles were specifically cited by SoftBank in its announcement of the collapse, saying that such challenges prevented the “consummation of the transaction, despite good faith efforts by the parties.” 

Jensen Huang, founder and CEO of Nvidia, said: “Arm has a bright future, and we’ll continue to support them 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. 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. I expect Arm to be the most important CPU architecture of the next decade.”

In the wake of this collapse, Arm CEO Simon Segars is stepping down to be replaced by head of IP Rene Haas.

SoftBank said that it will now start preparations for a public offering of Arm by the end of March, 2023. 

The deal, which would have been one of the biggest tech component acquisitions ever, had experienced multiple delays due to regulatory pushback, with UK, EU and US authorities all challenging the takeover. The US’s Federal Trade Commission (FTC) also sued to stop the acquisition. 

The US under president Biden has taken a tougher stance against mega mergers and acquisitions in the tech space than previous administrations. This outcome may have Microsoft fretting over its US$68.7 billion acquisition of Activision Blizzard, with the FTC already set to review the deal.