Nvidia Abandons Arm Acquisition in Face of 'Significant Regulatory Challenges'

[MacRumors]

As expected, Nvidia has officially abandoned efforts to acquire chip maker Arm after talks reportedly "collapsed" between the two parties on Monday, according to the Financial Times.

From the paywalled report:

SoftBank and Nvidia said they had agreed to scrap the deal because of "significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties."

Reports late last month suggested California-based Nvidia was edging away from its planned acquisition of the British chip company, owned by Japanese multinational Softbank, because of its failure to win approval from regulators.

In December 2021, the United States Federal Trade Commission filed a lawsuit to prevent Nvidia from acquiring Arm as the purchase would give Nvidia control over computing technology and designs that rival firms rely on to develop competing chips.

The FTC said that allowing the acquisition to move forward would stifle "innovative next-generation technologies" and would "unfairly undermine" Nvidia's competitors.

Nvidia is a customer of Arm and Arm has many licensing deals with Nvidia competitors, which is why it was clear from the beginning that the purchase would be subject to regulatory scrutiny. Nvidia first announced plans to purchase Arm in September 2020.

Chipmaker Qualcomm was one of the Nvidia competitors that objected to the purchase, and in February 2021, it told several regulatory bodies in the US, UK, and EU that the acquisition would allow Nvidia to become the gatekeeper for Arm's technology, preventing other chipmakers from using it.

Arm licenses its chip designs to over 500 companies, including Apple, and its architecture is used in 95 percent of the world's smartphones. Arm's hardware underpins all of Apple's custom silicon processors such as the A14 in the iPhone 12 and the M1 in the MacBook Pro, since Apple licenses the Arm instruction set.

If the proposed $66 billion dollar acquisition had gone through, it would have been the biggest sale in the history of the semiconductor industry.

Article Link: Nvidia Abandons Arm Acquisition in Face of 'Significant Regulatory Challenges'

 

[justperry]

Perfect, it wouldn't be approved anyhow.

 

[DHagan4755]

Ok now what? Is Apple going to buy them? I bet that wouldn't get regulatory approval either.

 

[opeter]

Ok now what? Is Apple going to buy them? I bet that wouldn't get regulatory approval either.

They (Apple) can't. Noone of the big tech companies can buy ARM.

Anyway, if Nvidia is smart, they will try to look after alternatives for implementation for it's own CPUs and SOCs, like the RISC-V open platform.

 

[azentropy]

Ok now what? Is Apple going to buy them? I bet that wouldn't get regulatory approval either.

Right. Any technology company who possibly be interested in acquiring them would face the same sort of approval issues. It isn't like Coca-Cola is going to throw their hat into the ring.

 

[syklee26]

Why would Apple buy ARM? They have secured the license via license agreement so there is no point (and probably a long one with option to opt out).

Better chance of Apple acquiring LEG than ARM.

 

[calstanford]

Apple could buy a small stake (say 5% and a board seat to influence some of the development)

 

[syklee26]

Ok now what? Is Apple going to buy them? I bet that wouldn't get regulatory approval either.

They (Apple) can't. Noone of the big tech companies can buy ARM.

Anyway, if Nvidia is smart, they will try to look after alternatives for implementation for it's own CPUs and SOCs, like the RISC-V open platform.

Apple is not a chip manufacturer so I am not sure if they would have regulatory issues. I don’t think there is legal impediment (or they can maneuver in a way to circumvent it), but there is no point for Apple to acquire them since they have a long term license.

 

[Steve121178]

Great news!

 

[NoSoup4U]

Right. Any technology company who possibly be interested in acquiring them would face the same sort of approval issues. It isn't like Coca-Cola is going to throw their hat into the ring.

Coca-Cola! Great idea.

I'd like to teach the world to ARM
In perfect harmony...

 

[alexe]

Good. Nobody needed this merger.

 

[jz0309]

good and as expected.
another report I read yesterday suggests that SoftBank will now take Arm to IPO ...

 

[Madhatter32]

Berkshire might take a look. It's a gatekeeper business which they like -- although it is technology, which is not their favorite industry. Other than that possibility, it probably gets spin-off to the public through an IPO or otherwise gets bought by a debt laden SPAC/private equity concern with no past or future.

 

[JosephAW]

Apparently Qualcomm has more lobbyists than Nvidia. Who’s next?

 

[GMShadow]

Apple could buy a small stake (say 5% and a board seat to influence some of the development)

Apple already has an architectural license which allows them to do pretty much whatever they want. There’s no need to reacquire a stake.

 

[theluggage]

Apple is not a chip manufacturer so I am not sure if they would have regulatory issues.

For the purpose of regulatory & competition issues I'd say the existence of the M1 and Ax-series SoCs makes Apple just as much a "chip manufacturer" as Nvidia - you can argue the toss about who owns the fab plants and how the groups that handle chip design are structured but, ultimately, the product is called "Apple Silicon", not "TSMC Silicon" and Apple call the shots on who they sell it to and how much.

Apple are also, a major seller of ARM-related devices - if the big industry players were uncomfortable about Nvidia controlling ARM, how do you think (say) Samsung would feel about the maker of the iPhone controlling it? It might be good news for Apple fans, but Apple would naturally concentrate on holding on to new ARM-related technology for Mac and iOS rather than providing their competitors with the tools to make better products - which wouldn't be good for ARM as a whole.

Apple could buy a small stake (say 5% and a board seat to influence some of the development)

Ironically, Apple were one of the co-founders of ARM Ltd. back when Acorn spun it off as a separate company. They had to cash in their shares when they nearly went bust around the turn of the century (as someone posted in another thread, probably a major reason Apple survived...).

Ok now what?

That's the big question. The "best for the industry" solution would be to stick to the winning formula and keep them as an independent holding company (again) - and hope that the failure of this bid means that they won't just get snapped up and assimilated by Microsoft or Intel (or Apple). The problem is Softbank paid a ton of money for ARM when they had cash to spare, and are now looking for a bigger payday than they'll get from just being a shareholder.

These big, silly-money acquisitions really are a blight - pretty much a case of buying a company with it's own money - a successful company ends up being expected to produce ludicrous returns so that its new owners can recoup the inflated purchase price. Of course, a lot of brokers, lawyers, middle-men etc. all make a killing when such a large amount of capital changes hands and don't need to give a wet slap about the long term...

 

[Lestdog]

Apple is not a chip manufacturer so I am not sure if they would have regulatory issues. I don’t think there is legal impediment (or they can maneuver in a way to circumvent it), but there is no point for Apple to acquire them since they have a long term license.

Neither in Nvidia a chip maker.

 

[laptech]

It was very simple, all NVIDIA had to do was convince the regulators that they would not restrict who could use ARM technology and not interfere with existing ARM licenses. NVIDIA could not give those assurances and here we have the result.

 

[Xenobius]

The best decision Nvidia ever made.

 

[Spock]

I can't say that I am surprised. I didn't figure this would go through from the start.

 

[ilikewhey]

Apple is not a chip manufacturer so I am not sure if they would have regulatory issues. I don’t think there is legal impediment (or they can maneuver in a way to circumvent it), but there is no point for Apple to acquire them since they have a long term license.

nvidia is not a chip manufacturer either they get their chip from tsmc just like apple.

 

[bradman83]

Apple is not a chip manufacturer so I am not sure if they would have regulatory issues. I don’t think there is legal impediment (or they can maneuver in a way to circumvent it), but there is no point for Apple to acquire them since they have a long term license.

As others have already pointed out neither Apple nor Nvidia are chip manufacturers, they both design chips and contract out the manufacturing. The difference is more that Apple sells its chips as part of complete products whereas Nvidia sells their chips as components.

Apple absolutely would face regulatory headwinds if they were attempt to buy ARM. All smartphones and tablets rely on ARM instruction set chips (if not outright ARM reference designs), and as such regulators would frown on Apple, Samsung, or any other major player owning ARM and potentially gaining an unfair advantage over competitors.

What could pass regulatory muster would be various tech companies banding together and creating a holding company or corporate trust or something similar to buy and hold ARM, allowing it to retain independence while giving it the financial backing necessary.

 

[spartan1967]

Nvidia is becoming quite good at abandoning things, like it’s PC gamers.

 

[Onelifenofear]

What stupid is ARM was allowed to be sold to Softbank in the first place. It's lucky they weren't strip-mined and bits sold off. Softbank maks really bad decisions.

Also, the fact it's 3x it's worth in 3 years, there were some bad ARM Boardroom Choices too.

 

[TheYayAreaLiving 🎗️]

Good move! Hopefully, it never gets approved.