Nvidia’s $40bn takeover of UK chip designer Arm collapses

Japan’s SoftBank announces that sale of British company faces insurmountable regulatory hurdles

First published on Tue 8 Feb 2022 03.12 EST

Nvidia’s planned $40bn (£29.6bn) acquisition of the Cambridge-based chip designer Arm from Japan’s Softbank has collapsed, the companies said on Tuesday, after regulatory hurdles proved insurmountable.

The cash-and-stock deal was announced in 2020 but the US Federal Trade Commission sued to block it in December, arguing that competition in the nascent markets for chips in self-driving cars and a new category of networking chips could be hurt if Nvidia carried out the purchase.

The buyout also faced scrutiny in the UK and the EU amid concerns that it could push up prices and reduce choice and innovation. It had yet to receive approval in China, which has previously withheld approval of cross-border chip acquisitions.

SoftBank said on Tuesday that Arm would now prepare for a stock market flotation before the end of the financial year to 31 March 2023.

The sale would have marked an early exit from Arm for SoftBank, which acquired it for $32bn, and the collapse of the deal marks a big setback to the Japanese conglomerate’s efforts to generate funds at time when valuations across its portfolio are under pressure.

Arm said in a separate statement that it had appointed Rene Haas as its chief executive officer, effective immediately. A chip industry veteran, Haas joined Arm in 2013 and before that worked for seven years at Nvidia.

“Rene is the right leader to accelerate Arm’s growth as the company looks to re-enter the public markets,” the SoftBank chief executive, Masayoshi Son, said in the statement from Arm.

SoftBank said that Arm’s net sales rose 40% to $2bn in the nine months to December compared with the same period a year ago.

An Arm acquisition would have put Nvidia into even more intense competition with rivals in the data centre chip market such as Intel and Advanced Micro Devices Inc.

Arm licenses its architecture and technology to customers such as Qualcomm, Apple and Samsung that design chips for devices from mobile phones to computers.

The Japanese investment company said it would recognise $1.25bn breakup fee that Nvidia had deposited as a profit in the fourth quarter.

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