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Nvidia Mum On Reports $40B Arm Deal Has ‘Collapsed’

Dylan Martin

Nvidia’s plan to acquire British chip designer Arm for $40 billion has fallen apart, according to reports in two news outlets, but the GPU maker has declined to comment so far.

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Nvidia has declined to comment on reports Monday that its plan to acquire British chip designer Arm has “collapsed” in the face of stern pushback from regulators.

The Financial Times reported the news Monday night, citing “three people with direct knowledge of the transaction.” Citing one of them, the report also said Arm’s current owner, Japan-based SoftBank Group, will pursue an initial public offering for Arm and receive a break-up fee of $1.25 billion from Nvidia.

Bloomberg echoed the Financial Times’ findings and added that Arm CEO Simon Segars has resigned, which the news organization said “wasn’t related to the demise of the deal.” Arm President Rene Haas is taking over as CEO in Segars’ place, both publications reported.

“We’ll decline to comment,” an Nvidia spokesperson told CRN when asked whether the chipmaker has ended its pursuit to acquire Arm.

[Related: The 10 Hottest Semiconductor Companies To Watch In 2022]

Spokespeople for Arm and SoftBank didn’t immediately respond to requests for comment.

The Financial Times’ report comes nearly two weeks after Bloomberg reported that Nvidia had told partners that it doesn’t believe its $40 billion acquisition of Arm would close in the face of serious concerns from regulators in the United States, United Kingdom and European Union.

At the time, spokespeople for Nvidia and SoftBank expressed confidence that the deal was still on.

One solution provider contacted recently by CRN questioned the benefit Nvidia’s pursuit of Arm would have brought to the channel.

“I couldn’t understand why Nvidia needs to own Arm when Arm is open. From my position as a partner, I feel like they’re still going to be able to bring the same solutions to me as if they owned Arm,” Eliot Eshelman, vice president of strategic accounts and high-performance computing initiatives at Microway, a Plymouth, Mass.-based Nvidia partner, told CRN in December after the Federal Trade Commission sued to block the acquisition over antitrust concerns.

“They’re going to design whatever CPU, GPU, networking mix that they can dream up, and I’m going to be able to ship it, and it doesn’t matter who owns Arm,” Eshelman said.

Several analysts said the Nvidia-Arm deal was unlikely to go through after the FTC lawsuit, which added to apprehension from other regulators that the merger would harm competition.

In its December lawsuit, the FTC said Arm’s role as the “Switzerland” of the semiconductor industry is a prime reason why it believes Nvidia’s acquisition of the British chip designer would harm competition in the data center market, among other markets.

Many companies, including Apple and Amazon, license Arm’s technology to build their own processors, and Nvidia’s direct rivals, Intel and AMD among them, also rely on Arm for some products such as FPGAs and SmartNICs. AMD uses Arm for security chips in its EPYC server processors.

If Nvidia were to acquire Arm, the FTC alleged that it would create uneven access to Arm’s technology between Nvidia and other companies. This would reduce competition and, in turn, reduce product quality, innovation and choice while also increasing prices for customers, the agency said.

Nvidia had repeatedly promised that it would invest in Arm’s research and development, maintain Arm’s open licensing model and “create more opportunities for all Arm licensees and expand the Arm ecosystem.” This, however, had not allayed the concerns of the FTC and other regulators, including the United Kingdom’s Competition and Markets Authority, which is investigating the deal.

Nvidia’s stock price was up roughly 0.5 percent in after-hours trading Monday following the reports.

Dylan Martin

Dylan Martin is a senior editor at CRN covering the semiconductor, PC, mobile device, and IoT beats. He has distinguished his coverage of the semiconductor industry thanks to insightful interviews with CEOs and top executives; scoops and exclusives about product, strategy and personnel changes; and analyses that dig into the why behind the news.   He can be reached at dmartin@thechannelcompany.com.

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