Good news Intel and Qualcomm: Nvidia likely dropping $40B bid to acquire Arm

Zac Hall | Jan 25 2022 - 11:20 am PT

Back in 2020, Nvidia declared its intention to purchase chip designer Arm from its owner Softbank for $40 billion. Nearly a year and a half later, Nvidia is reportedly backing out of the deal due to regulatory obstacles.

Apple relies on Arm’s instruction set to fabricate custom processors used in iPhones, iPads, and Macs, although the deal likely wouldn’t have affected this arrangement.

If the acquisition were approved, Nvidia promised to “continue to operate [Arm’s] open-licensing model while maintaining the global customer neutrality that has been foundational to its success.”

Said another way, Nvidia and Apple don’t share the closest relationship, but leadership knew the value of Arm’s business with Apple.

Now it appears that won’t actually be tested. The Federal Trade Commission sued to block Nvidia’s $40 billion bid to buy Arm last month, and now Bloomberg is reporting that Nvidia now plans to walk away.

Instead, Arm’s owner SoftBank is considering an initial public offering to take the chip designer public and raise capital.

Nvidia has told partners that it doesn’t expect the transaction to close, according to one person, who asked not to be identified because the discussions are private. SoftBank, meanwhile, is stepping up preparations for an Arm initial public offering as an alternative to the Nvidia takeover, another person said.
Bloomberg

Talks with regulators are still ongoing, the companies say, but the clock is running out on the initial acquisition agreement. Nvidia expected the acquisition to take 18 months to close with the initial agreement set to expire after 24 months. Bloomberg notes that the two companies could opt to renew the agreement, but discussions about walking away are already in progress.

9to5Mac’s take

With clients like Apple and chips being used in everything from phones to cars, Arm isn’t a business in search of a lifeline. SoftBank still seems eager to earn more cash from owning Arm, and Apple isn’t expected to be affected whether that’s through being sold or an IPO.

Intervention by the FTC is instead intended to protect Intel, Qualcomm, and even Google from Nvidia becoming too powerful for the competition to stay competitive.