SoftBank pulls plug on sale of Arm to Nvidia due to "significant" challenges

Nvidia and SoftBank have agreed to terminate an agreement for the US company to acquire UK chipmaker Arm due to "significant regulatory challenges".

Instead, SoftBank will look to float Arm on the stock market by 2023, the Japanese firm said in a statement.

Since it was announced in 2020, Nvidia's takeover of Arm has been met with scepticism from various parties within the semiconductor industry. and has also been the subject of regulatory investigations from a number of governing bodies around the world.

The UK's Competition and Market's Authority (CMA) said the deal warranted an "in-depth" investigation because it could potentially give Nvidia the power to restrict access to Arm's intellectual property. Similar concerns were cited by regulators in the US and EU, but with the deal now cancelled, the CMA has stated that it is no longer interested in pursuing an investigation.

Finding a way to appease regulators and also justify the $40 billion price tag has proven "overwhelmingly challenging", according to CCS Insight analyst, Geoff Blaber. He said the deal was also disruptive to Arm and its lucrative ecosystem; its licensees collectively shipped an average of 22 billion chips annually over the previous three years.

"As predicted, opposition was considerable and shone a light on the strategic importance of Arm's technology and the vital need for Arm to remain independent," Blaber told IT Pro.

"The $40 billion price tag was such a sizeable premium that it left Softbank with no plan B. An IPO is the best route forward for the Arm ecosystem and will be applauded across the industry but it's certainly not a positive outcome for Softbank."

Arm to go public

The collapse of the acquisition appears to have resulted in executive changes for Arm, with CEO Simon Segars stepping down, effective immediately, according to a company statement. Industry veteran Rene Haas will now step into the role to lead the company through its IPO, while Segars takes up a position on the board of directors.

"Rene is the right leader to accelerate Arm's growth as the company starts making preparations to re-enter the public markets," said Masayoshi Son, the CEO of SoftBank. "I would like to thank Simon for his leadership, contributions and dedication to Arm over the past 30 years."

The company has previously gone to market, making its initial debut in 1998, but it was brought by investment group SoftBank in 2016. It's thought that SoftBank agreed to the sale of Arm so that it could shore up its finances after sling money on other investments, such as the shared office space firm WeWork and even Uber.