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Nvidia's $40B Proposed Acquisition of Arm Shuts Down

The proposed $40 billion sale of chip-designer Arm to Nvidia was shut down by the two parties, citing regulatory objections.

The end of the deal was described in a Monday announcement by Arm's owner, Tokyo-based The SoftBank Group, and Santa Clara, Calif.-based Nvidia. A regulatory block was the reason described, but details weren't provided. SoftBank will gain the "$1.25 billion prepaid by NVIDIA" for engaging in the proposal.

FTC Opposition
The deal faced strong opposition from the U.S. Federal Trade Commission (FTC). The FTC announced that it had sued the two companies over it, as described in this December FTC announcement.

The FTC, in its complaint, had described Arm, which makes processor designs that are used by chipmakers, as the "Switzerland of the semiconductor industry." Nvidia's acquisition of Arm would lead to less competition in the market. The FTC also argued that the intellectual property of Nvidia's competitors could be compromised, should the acquisition go through:

Arm licensees share their competitively sensitive information with Arm because Arm is a neutral partner, not a rival chipmaker. The acquisition is likely to result in a critical loss of trust in Arm and its ecosystem, the complaint alleges.

Nvidia's Response
In a response to those claims, Nvidia's court filing (PDF) argued that the acquisition would "enhance innovation and competition in the semiconductor industry" because Arm's mobile market "has become saturated" and it can't compete in the PC market because of AMD and Intel's "vertical integration." Nvidia also argued that its primary products, graphical processing units, doesn't compete with Arm's intellectual property, which is used in central processing units.

Nvidia and SoftBank had also contended that the deal would steer Arm into new avenues, such as artificial intelligence and datacenter support. Nvidia argued that Arm needed such a boost because "Arm licensees have repeatedly failed to find meaningful traction in datacenter," referencing efforts by Qualcomm, Broadcom and Marvell.

Nvidia had also stated that Arm, if acquired, would be established as independent licensing agency, selling to "any and all third parties," and that licensee intellectual property information would be anonymized.

Arm Going Public
SoftBank, concurrent with announcing the end of the deal, indicated plans to take Arm public, as described in this announcement. The public offering is expected to occur before the end of Arm's fiscal year on "March 31, 2023."

The Arm deal, when proposed back in 2020, had also been opposed by Arm co-founder Hermann Hauser. He wanted U.K. jobs guarantees for Arm employees, assurances that Nvidia would not gain preferential treatment and an exemption from the U.S. Treasury Department's Office of Foreign Assets Control over where Arm products could be sold.

About the Author

Kurt Mackie is senior news producer for 1105 Media's Converge360 group.

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