A $66 billion takeover of UK chipmaker Arm by computing giant Nvidia has been terminated due to ‘significant regulatory challenges’.
The Cambridge-headquartered chipmaker, owned by Japanese giant SoftBank, will now prepare to become a public company, with New York thought to be the most likely destination for that listing.
Arm CEO Simon Segars has been replaced by Rene Haas, head of its intellectual property unit, following the collapse of the deal.
Arm revealed in September 2020 that it had agreed a $40bn sale to the American graphics chip specialist.
The world’s largest ever semiconductor deal was expected to complete in 18 months but first faced a formal investigation from UK watchdog the Competition and Markets Authority before the UK government instructed the CMA to begin a ‘Phase 1’ investigation into specific considerations around competition, jurisdiction and national security.
That report found concerns over whether, following the takeover, Arm would have an incentive to withdraw, raise prices or reduce the quality of its IP licensing services to Nvidia’s rivals.
Nvidia always said it would retain Arm’s neutrality and keep its IP registered in the UK – but two of Arm’s founders, Hermann Hauser and Tudor Brown, raised concerns of their own around whether the UK firm would remain neutral.
A statement said Nvidia and Arm had agreed to terminate the deal despite ‘good faith efforts’. SoftBank would have been due $66bn from the deal as a result of the increase in Nvidia’s stock price since 2020.
Arm will now start preparations for a public offering in FY 2022-23.
“Arm is becoming a center of innovation not only in the mobile computing revolution, but also in cloud computing, automotive, the Internet of Things and the metaverse, and has entered its second growth phase,” said Masayoshi Son, chairman and CEO of SoftBank Group.
“We will take this opportunity and start preparing to take Arm public, and to make even further progress.”
Arm’s processor technology is the world’s most widely licensed and deployed semiconductor design of its kind and is used in virtually all smartphones, the majority of tablets and digital TVs, and a significant proportion of all chips with embedded processors.
SoftBank Group will retain a $1.25 billion advance fee paid by Nvidia, while Nvidia will retain its 20-year Arm license.
“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 CEO 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.
“I expect Arm to be the most important CPU architecture of the next decade.”