Tuesday, February 8th 2022
NVIDIA Acquisition of Arm Collapses, UK Company to Seek IPO
NVIDIA's long-awaited acquisition of Arm Ltd. is collapsing, confirm Financial Times and Reuters. According to the latest information, the deal is not happening, and the previously agreed terms are no longer valid. As we now know, NVIDIA will have to pay Softbank (Arm's owner) a break-up fee of $1.25 billion, which was the deal that the two settled on if the acquisition fails. NVIDIA has originally planned to purchase Arm for $40 billion. However, the regulators from UK and EU have been blocking the deal from happening on the terms that it would hurt competition and block innovation.
What is next for Arm Ltd. is to go public and list itself on one of the world's biggest stock exchanges, either domestically or overseas in the US. The IPO efforts of Arm are estimated to be worth around $80 billion, representing a double amount of what NVIDIA wanted to purchase the company for.
Update 08:35 UTC: Here is the official press release from NVIDIA and Softbank below:
Source:
via Reuters
What is next for Arm Ltd. is to go public and list itself on one of the world's biggest stock exchanges, either domestically or overseas in the US. The IPO efforts of Arm are estimated to be worth around $80 billion, representing a double amount of what NVIDIA wanted to purchase the company for.
NVIDIA (NASDAQ: NVDA) and SoftBank Group Corp. ("SBG" or "SoftBank") today announced the termination of the previously announced transaction whereby NVIDIA would acquire Arm Limited ("Arm") from SBG. The parties agreed to terminate the Agreement because of significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties. Arm will now start preparations for a public offering.
"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."
SBG today also announced that, in coordination with Arm, it will start preparations for a public offering of Arm within the fiscal year ending March 31, 2023. SBG 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 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."
Mr. Son continued, "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."
NVIDIA and SBG had announced that they had entered into a definitive agreement, under which NVIDIA would acquire Arm from SoftBank, on September 13, 2020. In accordance with the terms of the agreement, SBG* will retain the $1.25 billion prepaid by NVIDIA, which will be recorded as profit in the fourth quarter, and NVIDIA will retain its 20-year Arm license.
* 24.99% of Arm shares are attributable to SoftBank Vision Fund 1.
94 Comments on NVIDIA Acquisition of Arm Collapses, UK Company to Seek IPO
www.techpowerup.com/289558/ftc-sues-to-block-usd-40-billion-semiconductor-nvidia-and-arm-chip-merger?amp
“The FTC is suing to block the largest semiconductor chip merger in history to prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies," said FTC Bureau of Competition Director Holly Vedova. "Tomorrow's technologies depend on preserving today's competitive, cutting-edge chip markets. This proposed deal would distort Arm's incentives in chip markets and allow the combined firm to unfairly undermine Nvidia's rivals. The FTC's lawsuit should send a strong signal that we will act aggressively to protect our critical infrastructure markets from illegal vertical mergers that have far-reaching and damaging effects on future innovations.”
This is Nvidia’s chickens coming home to roast and Huang has egg all over his face. No one deserves worst when it comes to big business decisions in the chip industry.
And the expression is "couldn't care less, as in it is impossible to care any less. Could care less means that you do care...
The $1.25 billion "break-up" fee is an added bonus. Although I guess that means Geforce cards, when available, will be priced at least $100 higher than before. Gotta recoup that loss...
“However, after 17 months, it has become increasingly clear that government regulators were not apt to approve the deal. Even with concessions being made by NVIDIA, European Union regulators ended up opening an investigation into the acquisition, Chinese regulators have held off on approving the deal, and US regulators moved to outright block it. Concerns raised by regulators centered around NVIDIA gaining an unfair advantage over other companies who use Arm’s IP, both by controlling the direction of its development and by their position affording NVIDIA unique access to insights about what products Arm customers were developing – some of which would include products being designed to compete with NVIDIA’s own wares. Ultimately, regulators have shown a strong interest in retaining a competitive landscape for chips, with the belief that such a landscape wouldn’t be possible if Arm was owned by a chip designer such as NVIDIA.”
www.anandtech.com/show/17245/nvidiaarm-acquisition-officially-nixed-softbank-to-ipo-arm-instead
People seriously underestimating the money required to bring parity between ARM and Apple and Intel. Seems like that will never happen now. nVidia won't risk all their money on high performance designs that have to compete with dirt cheap standard ARM designs. It's always so easy to say "don't merge" but the reason the merger was being considered is because ARM has been completely failing for years. Softbank has done nothing with it and it is an embarrassment for them.
Most people here know nothing about the financial markets or valuations. Softbank bought ARM for $32 billion 6 years ago. nVidia offered $40 billion and it was gratefully accepted. That's a 25 percent improvement over 6 years. nVidia on the other hand has increased their market cap by 3750 percent or so in the last 6 years.
3750 / 25= 150. Yes, nVidia has been growing 150 times faster than ARM has.
Now Softbank will IPO the company and they will be owned by all the random pension funds and Chinese investment conglomerates. Not sure why everyone thinks that will be better. It will get a temporary massive boost in value and then fail as a stock after several years and not be relevant. Just watch. The ISA itself is not a company. What do people want ARM to do in order to get the funds to compete? Try to charge everyone twice as much money for licensing? The exact same thing people don't want nVidia to do with the company.
What a disaster for ARM.
I think this is also why Intel is going to have a tough time operating a foundry business, without spinning it off in a separate company.
Qualcomm is trying to build a Windows chip by buying those former Apple engineers. Notice I said Qualcomm is doing it, not ARM that is doing it.
Meanwhile thanks to Facebook's fall, nVidia is now worth more than Meta.
Now the entire management team including the CEO at ARM is out. Good luck to them. They'll need it.
First of all, Apple's chips are based around Arm's original designs and are likely to continue to be so for the foreseeable future, unless Apple decides to fork off so far that they no longer are using Arm tech in their chips.
Arm is not behind anyone, they design the IP that most companies in the world are using. You're spinning the lies that Nvidia and Arm put in their government filings, to try and make it sound like Arm is being beaten by their competitors, left, right and centre, when nothing could be further from the truth.
And exactly how would there be parity between Arm and Intel (x86)? They are two very different CPU architectures, where Arm was designed for low power and it's still the main design focus today. Yes, we're starting to see some, but still fairly minor crossovers on the lower-end in the mobile computer segment and yes, Arm has made some server CPU core designs, but it doesn't mean they're meant to take on Intel 1:1, but instead are designed for applications where either power efficiency matters, or where 100's if not 1000's of cores make more sense than having a few very big, very fast cores.
Who gives a F*** about stupid financial analysts that understand nothing about the underlying technology? If Arm goes bust, then so does half, if not more of the technology companies out there, so that's never going to happen, at least not until there's a viable alternative, which there simply isn't for most of the product segments Arm designs for. On top of that, SoftBank is in a financial pickle and is trying to raise funds any which way possible, so selling Arm was a means to an end.
Since you clearly can predict the future, it's nice to know that none of Arm's partners are going to invest in them, as the likes of Qualcomm, Broadcom, Marvell, ST, NXP and so on, wouldn't be interested in getting a slice of that action, right?
Seriously, please keep your financial analysis crap to yourself, this isn't the forum for that, it's a tech forum.Arm DOESN't make products, they license IP. This shows how utterly and totally lost you are.
I love your derision for financial analysts. When you manage a company doing 150 times worse than others, you bring that to your shareholders and see how they respond. Clueless. You are confused when you buy ARM ISA products and think "ARM is doing great, look at all these ARM products I am buying" as if ARM had anything to do with them. Softbank is desperate to get rid of them for a reason. The company is failing.
You should try to point at things that ARM the company is actually responsible for, not their partners, and tell me they are doing a good job. Try it. The financial results are a clue. You know technically nVidia is just a designer also. They are fabless, just like ARM.
You know AMD and Intel share an ISA. There's no problem at all that the x86 IP isn't in a seperate company, "x86 Holding Company". nVidia made concessions to allow ARM's ISA to be completely open in a way x86 isn't but it didn't matter to people The people meat-shielding ARM are also funny since ARM, the company ARM itself, wanted to merge. You're not doing ARM any favors in blocking what the company wanted and then pretending you are on ARM's side or something.
:)
If Arm eventually slows to a halt other competitors are there to pick up the slack, like Risc V for example, as always happens as technology iterates and evolves.What does that have to do with anything!? Let's see how long that inflated valuation lasts lol :DI think every major company that depends on Arm (Qualcomm, Apple, Google, Samsung, etc.) will be all over this IPO to prevent a situation like this (a competitor trying to gobble up an important piece of the industry) from happening again without their aproval.Wow, you're so clueless it hurts :D Their designs are derived from the original ARM core designs, the shared ISA is the entire point! Same thing with qualcomm/samsung/google/etc - they derive the ARM core designs with more or less customization.There are problems, there simply hasn't been any solutions so far (discounting Apple emerging as big player in the scene and eventually Qualcomm when they figure things out and put the Nuvia engineers to work - all sharing the arm ISA as the common denominator). x86 has been stagnated for close to a decade exactly because there are only 2 companies who can produce processors with it, one of them went through a lot of financial hurdles by failing to deliver while the other sat on their ass as a market leader.
It's a great example of why Nvidia shouldn't be allowed to own ARM, not the other way around.
The huge consensus from analytical articles, news stories, government responses, etc to Intel and Nvidia buisness practices and planned acquisitions show the need to block any further industry consolidation under these two companies.
I do think you underestimate the PRC though, they already have hypersonic missiles to my knowledge, and well EU and USA do not.
You clearly don't understand anything about Arm's business model or how licensing work. Let's just stop here, as you're making a fool of yourself.
Risc V is posed to change that eventually, in any case there is some competition in the market. At the product level, companies are also not restricted to use the default ARM designs and can tailor and modify them to their own needs (like Apple does, or Qualcomm or Mediatek among many others).