Nvidia Deal to Buy Arm From SoftBank Is Off After Setbacks

SAN FRANCISCO – Nvidia, the Silicon Valley chip maker, is ending its nearly 18-month effort to buy the arm, which licenses the chip technology used in most smartphones, two people familiar with the matter said they were not authorized to discuss it. .

Nvidia, a fast-growing company whose chips are known for rendering images in video games, was valued at $ 40 billion for Arm after offering cash and stock in September 2020, making it the most expensive deal ever among chip companies. Nvidia has since 2016 offered to buy the arm from SoftBank, a Japanese conglomerate owned by a British company. Nvidia’s rising share price sent the deal high on Monday, settling at around 60 billion.

But the blockbuster deal faced hurdles, including a federal trade commission lawsuit in December to block the acquisition, as well as opposition from regulators in Britain.

The end of the deal is a blow to Nvidia and its chief executive Jensen Huang, who have driven the company’s chips into new applications, such as artificial intelligence software, run by giant cloud companies. Mr. Huang argued that Arm, whose microprocessor technology is embedded in the more than 25 billion chips sold each year, could help Nvidia gain a wider space in data centers than rivals such as Intel.

But Qualcomm, Microsoft and others who license Arm Technology have argued that the deal could hurt their businesses. It resonated with some regulators.

In its lawsuit to block the deal, the FTC insisted that Nvidia, which also licenses ARM technology, could block access to the technology or manipulate the price paid for the technology by other chip companies. Nvidia could also misuse confidential information that companies share with Arm, the agency said.

Nvidia and Arm rejected those arguments. Mr. Huang has repeatedly insisted that Nvidia will keep the arm’s business model. He also said the deal would promote innovation as Nvidia’s financial resources allow Arm to develop more technology more quickly.

Nvidia also suggested measures to address regulatory concerns. This includes the establishment of a completely separate licensing entity, as well as the licensing of arm-based intellectual property developed by Nvidia to all companies on a non-discriminatory basis.

Proponents of her case have been working to make the actual transcript of this statement available online. Proponents of her case have been working to make the actual transcript of this statement available online.

Whoever could have won on the court, the long delay in closing the deal caused problems for Arm and Softbank. Softbank paid $ 32 billion for Arm in 2016, through its chief, Masayoshi’s son, as an adventurous bet on the global boom in Internet-connected devices, and it was looking to benefit from the deal.

SoftBank now plans to make Arm public, said a source familiar with the situation. Arm’s chief executive Simon Segers has decided to resign, and another of the company’s executives, Ren Haas, will be his successor, the source added.

The end of the deal is not surprising. Many Wall Street analysts concluded after the FTC suit that Arm would have to make other plans. Last month, Bloomberg reported that Nvidia is likely to give up the attempt; The Financial Times reported earlier on Monday that the transaction was being canceled.

Sanford c. Bernstein analyst Stacey Rasgone wrote in a research note last month that “it seems safe to say that virtually no one in the investment community expects it to close.”

He suggested that Nvidia should be able to continue its recent momentum in the data center market. The company is also driven by strong chip demand associated with AI, video games, assisted driving and bitcoin mining.

Arm first went public in 1998 and remained public until the acquisition of Softbank. Pierre Ferragu, an analyst at New Street Research, wrote earlier this month that Arm should be able to successfully go public again, with valuations in the 45 billion range.

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