Nvidia cancels Arm acquisition due to ‘significant’ regulatory scrutiny

In 2016, Arm was acquired by Japanese conglomerate SoftBank Group for $32bn. Nvidia announced its intention to buy a 90 per cent stake in the firm for $40bn in September 2020.

The deal immediately faced regulatory scrutiny from the Federal Trade Commission in the US, from the UK’s Competition and Markets Authority (CMA) and from the EU’s antitrust regulators.

Following yesterday’s announcement by Nvidia, the CMA confirmed that it would cancel its investigation into the merger.

The latest deal attracted more criticism than SoftBank’s acquisition due to Nvidia’s significant presence in the semiconductor industry, which could present a threat to Arm’s longstanding reputation as an open and neutral supplier.

Even Arm’s original co-founder, Hermann Hauser, criticised the deal, saying it was a “disaster for Cambridge, the UK and Europe” and should be “blocked by regulators”.

The CMA said that an in-depth investigation into the deal was warranted on competition grounds due to concerns that, should the deal go ahead, the merged business would have the ability and incentive to harm the competitiveness of Nvidia’s rivals by restricting access to Arm’s intellectual property.

This technology is used by companies that produce semiconductor chips and related products, in competition with Nvidia, as well as forming the architectural backbone of the vast majority of smartphones and tablets.

“Arm has a bright future and we’ll continue to support them as a proud licensee for decades to come,” said Jensen Huang, Nvidia CEO.

“Arm is at the centre 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.”

In the wake of the deal collapsing, Softbank said Arm will start preparations for a public offering.

“Arm is becoming a centre 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, Softbank Group’s chief executive.

“We will take this opportunity and start preparing to take Arm public and to make even further progress.”