ARM buyout: Nvidia about to throw in the towel? [UPDATE 02/02/22]

0

It’s clearly not a scoop for us because we have been announcing for a very long time that the project of ARM acquisition by Nvidia would have very little chance of happening. The latest information seems to confirm this trend: the file of the acquisition of ARM by Nvidia should be closed. Update 8/02/2022 the two protagonists of this deal (ARM and Nvidia) have just officially announced that the intense regulatory scrutiny that the deal was facing had prevented the transaction from being concluded. Arm will now begin preparations for an IPO.

nvidia arm nodeal Before we begin, let’s remember that ARM is a British company, based in the United Kingdom but owned, capital-wise, by the Japanese group SoftBank. The various patents and intellectual properties of ARM are used by Apple, Qualcomm, Samsung and Huawei for their smartphone chips and beyond for some time. In mobile telephony, ARM’s footprint corresponds to a market coverage of about 90%.

Nvidia ARM

Nvidia’s buyout of ARM: A $1.25 billion no-deal

At the time of finalizing negotiations with SoftBank, Nvidia paid 1.25 billion, as a down payment, to the Japanese group. It is expected that SoftBank can keep this amount as a termination fee if the acquisition should fail. The initial plan was that the acquisition of ARM should be completed by Nvidia before the end of March 2022 .But several authorities have spoken out against the deal, which could threaten future competition and free access to ARM’s technologies. Some countries are also very active in countering this deal, such as China, which is concerned about access to ARM’s knowledge if the company is owned by an American entity. But, we can say that the coup de grace has come from the American paradoxically. The FTC decided in December 2021 to bring an action against Nvidia to block this deal. FTC Bureau of Competition Director Holly Vedova had said in a statement, “Tomorrow’s technologies depend on preserving today’s competitive, cutting-edge chip markets. This proposed deal would distort Arm’s incentives in chip markets and allow the combined company to unfairly undermine Nvidia’s rivals.”