The deal was one of the boldest moves by two industry leaders to define the future of computing, but it turned out to be too bold as regulators around the world had antitrust concerns about the deal.
It’s a blow to SoftBank, which had hoped to sell Arm for a tidy profit. Renee Haas, the president of Arm’s intellectual property group (and former Nvidia VP and general manager of its computing products business), will now become CEO of Arm.
Meanwhile, Arm said will consider a public offering instead of an acquisition, with an initial public offering happening within the next 12 months.
The U.S. Federal Trade Commission said it would sue to block the merger, as the combined company would unfairly undermine Nvidia’s rivals. European Union antitrust regulators also had objections. Rivals such as Intel, Advanced Micro Devices, and Qualcomm should breathe easier now. Intel had been backing one of Arm’s intellectual property rivals, RISC V, as a kind of contingency to deal with Nvidia’s potential hold on Arm.
Nvidia is the leader in the graphics processing unit (GPU) and AI processor market for computers and servers, while Arm made intellectual property that powered virtually all smartphones and internet of things devices.
Nvidia first announced its plans for this mega-merger in September 2020. At the time, the deal was valued at $40 billion. They had originally hoped the deal would close by March 2022.
“Arm has a bright future, and we’ll continue to support them as a proud licensee for decades to come,” said Jensen Huang, CEO of Nvidia, in a statement. “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 [SoftBank CEO Masayoshi Son] 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.”
Son once told me that he planned to use Arm to delve into the future of AI in preparation for the Singularity, or the moment when AI intelligence exceeds human intelligence, in the coming decades. But then he agreed to sell the company to Nvidia.
SoftBank Group announced that, in coordination with Arm, it will start preparations for a public offering of Arm within the fiscal year ending March 31, 2023. SoftBank believes Arm’s technology and intellectual property will continue to be at the center of mobile computing and the development of artificial intelligence.
“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 Son, CEO of SoftBank Group, in a statement. “We will take this opportunity and start preparing to take Arm public, and to make even further progress. I want to thank Jensen and his talented team at Nvidia for trying to bring together these two great companies and wish them all the success.”
SoftBank will keep a $1.25 billion payment from Nvidia as a breakup fee for the deal.