American chip manufacturer Nvidia Corporation is reportedly giving up on its efforts to acquire semiconductor and software design company Arm Holdings. Nvidia has been attempting to buy the SoftBank-owned British company over the past 18 months.
Nvidia's efforts to acquire the company were met with several setbacks, including a lawsuit filed by the Federal Trade Commission, which attempted to block the deal. The plan also faced regulatory opposition in the UK.
Nvidia initially made a move to buy Arm through a $40 billion cash and stock deal in September 2020. If it had pushed through, it would have been the largest deal ever made in the chip manufacturing industry. Based on the value of Nvidia's stock as of Monday, the deal is now worth around $60 billion.
The alleged termination of its acquisition plans is a major setback for Nvidia and its CEO, Jensen Huang, who has pushed the company's processors into new applications like artificial intelligence software operated by major cloud companies.
Huang claimed that Arm, whose microprocessor technology is included in over 25 billion chips shipped each year, may help Nvidia get a larger share of the data center market than competitors such as Intel.
Qualcomm, Microsoft, and other companies that license Arm technology have claimed that such a deal could hurt their operations and ability to compete fairly. The FTC said in its complaint to block the deal that Nvidia, which also licenses Arm technology, could limit access to Arms license or influence their prices. The FTC also claims in its suit that Nvidia could also misuse confidential information shared by its competitors with Arm.
Both Nvidia and Arm have rejected regulatory arguments to block the deal. Nvidia said that if it were allowed to acquire the company, it would retain Arm's business model. Nvidia also claimed that its resources would allow Arm to grow faster and develop new technologies quicker.
In an attempt to appease regulatory concerns, Nvidia previously proposed setting up a separate licensing entity while also committing to license Arm-based intellectual properties to all companies without discrimination.
Sources familiar with the matter said that Softbank now plans to take Arm public now that Nvidia has given up on the prospect of acquiring the company. The same sources said Arm's chief executive officer, Simon Segars, will be stepping down and replaced by Rene Haas.
Some analysts said they had already expected the deal to collapse, given the existing regulatory actions. Last month, Bloomberg analysts said they fully expect Nvidia to abandon the acquisition plan.
