UPDATE 2/8: Nvidia has officially abandoned its deal to acquire Arm from SoftBank.
In a press release, Nvidia explained that "significant regulatory challenges" prevented the acquisition from progressing and that Arm will now prepare for a public offering instead.
"Arm has a bright future, and we’ll continue to support them as a proud licensee for decades to come," said Jensen Huang, founder and chief executive officer of NVIDIA. "Arm is at the center 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."
"Arm is becoming a center 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, Representative Director, Corporate Officer, Chairman & Chief Executive Officer of SoftBank Group Corp. "We will take this opportunity and start preparing to take Arm public, and to make even further progress."
Working with SoftBank, Arm's public offering is expected to occur within the fiscal year ending March 31, 2023.
Original Story 1/25:Nvidia is reportedly preparing to abandon its effort to buy Arm from SoftBank after the US Federal Trade Commission sued to stop the $40 billion deal.
Nvidia has told company partners it doesn’t expect the merger to close, according to a report from Bloomberg, which cites a source familiar with the matter. In response, SoftBank reportedly plans on listing Arm on the stock market through an initial public offering.
Nvidia didn’t exactly deny Bloomberg’s report. In a statement, the company said, “We continue to hold the views expressed in detail in our latest regulatory filings—that this transaction provides an opportunity to accelerate Arm and boost competition and innovation.”
It’s a message the company has reiterated to government regulators. However, both the FTC and European authorities have said they think an Nvidia-Arm merger would be bad for competition in the tech industry, citing Arm’s outsized role in creating chip designs.
Arm-based processors power numerous smartphones, laptops, car entertainment systems, and smart home products from a variety of vendors, including Apple, Samsung, and Nintendo. Hence, regulators are concerned Nvidia could use Arm to influence and undermine competition across the IT industry.
"Tomorrow’s technologies depend on preserving today’s competitive, cutting-edge chip markets. This proposed deal would distort Arm’s incentives in chip markets,” FTC Bureau of Competition Director Holly Vedova said last month when the agency sued to stop the deal.
The FTC’s lawsuit won’t go to trial until August. In the meantime, both the UK’s Competition Markets Authority and regulators from the European Union are also scrutinizing the merger, and are expected to issue a decision on the matter in the coming months.
If Nvidia does abandon its bid, the company warned in November it’ll lose $1.25 billion on the down payment it made to acquire Arm.