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The Nvidia-Arm Deal is Dead; Softbank to IPO UK Chip Designer

Nvidia Arm
(Image credit: Nvidia)

The Nvidia dream of owning one of the world's most disruptive chip designers is over. Japanese conglomerate SoftBank, holders of UK-based chip design powerhouse Arm whose chips power most of modern day's smart devices, has announced that the company is going the Initial Public Offering (IPO) route. Nvidia has in the meantime confirmed the same ending, with both companies citing "significant regulatory challenges" as cause. It's a modern-day death by a thousand cuts.

"Arm has a bright future, and we’ll continue to support them as a proud licensee for decades to come," said Nvidia CEO Jensen Huang via a Business Wire press release. "Arm is at the center 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."

Announced in September 2020, the planned Nvidia acquisition of Arm from SoftBank was, at the time, valued as a $40 billion deal - one of the most significant acquisitions ever in the technology space. However, a company with the market clout of Nvidia acquiring a wholesale Instruction Set Architecture (ISA) and chip designer quickly sparked pushbacks from some industry players - most notably Arm licensee juggernauts such as Qualcomm, Apple and Samsung. 

Support for the acquisition amongst certain licensees seemed to be insufficient to allay fears of possible anti-competitive practices that might surge from the Nvidia acquisition. But the deal faced close regulatory scrutiny from the get go, as regulatory bodies time and again signaled their first impressions on the deal - the Federal Trade Comission (FTC), for one, sued to block it after calling it an "illegal vertical merger". The UK government also signaled its worries at the acquisition attempt, despite Nvidia also announcing a sizeable investment to expand ARM's R&D presence in Cambridge, UK with a new AI research and education center - and an ARM/Nvidia-powered AI supercomputer. Even Nvidia CEO Jensen Huang must've seen the writing on the wall at some point.

The world waits for no-one, however, and Arm is quickly moving on towards the preparatory stages for its IPO, which had already been waved as an alternative to the Nvidia purchase. Arm aims to complete the IPO within this fiscal year (which ends on march 32st, 2023). The failure isn't without its proverbial rolling head, however; the deal’s failure brought a management shake-up at Arm, with chief executive Simon Segars being replaced by Rene Haas. Interestingly, Rene Haas was the head of the company’s intellectual property unit.

As for Nvidia, the company is losing the $1.25 billion deposit it agreed with SoftBank, irrespective if the deal went through or not. The company really was carrying all the weight and risk on this transaction, which paired with Jensen Huang's words, shows just how much Nvidia wanted this deal to go through.  But considering Nvidia's stock performance in the meantime, and the fact that part of the acquisition was to be done through the company's shares, Nvidia would end up paying around $66 billion. Nvidia either just lost $1.25 billion or saved $64.75 billion. In business as in life, it's all a matter of perspective.

Francisco Pires is a freelance news writer for Tom's Hardware with a soft side for quantum computing.

  • InvalidError
    March 32st? Is that an alternative name for April 1st?
    Reply
  • renz496
    1.2 billions.....that probably equal to ARM 2 or 3 quarter revenue. plus despite failing to own ARM they replace the CEO with nvidia mole haha. but seriously rather than nvidia isn't that softbank that losing the most in this deal? can they even make back the kind of money they initially spend on ARM?
    Reply
  • digitalgriffin
    The thing about companies going public is they become beholden to the share holders. Thus ethical treatment of customers and employees becomes a 2, and 3rd priority. Corporate boards to keep stock share, will put people in charge that are only motivated by big performance payouts based on what the company valuation/stock price it. Thus it becomes a conflict of interest. Treat employees/customers ethically, or run them over to collect on a big performance bonus.

    "Here, we are giving you a 2% raise that we give everyone for the past 4 out of 5 years (Sorry we didn't give you a raise during covid). Be thankful even if you worked harder than everyone else. So sorry inflation is 7%+. But we must control cost. We don't care our sales increased 12-15%. We wanted 17% increase for you to get that other 1%."
    Reply
  • spongiemaster
    digitalgriffin said:
    The thing about companies going public is they become beholden to the share holders. Thus ethical treatment of customers and employees becomes a 2, and 3rd priority. Corporate boards to keep stock share, will put people in charge that are only motivated by big performance payouts based on what the company valuation/stock price it. Thus it becomes a conflict of interest. Treat employees/customers ethically, or run them over to collect on a big performance bonus.
    If people were afraid that Nvidia was going to raise licensing fees, just wait until they see what a bunch of maximize profits at all costs investors do to their licensing fees. ARM has lost money multiple times in recent years. That's not going to work going forward.
    Reply
  • digitalgriffin
    spongiemaster said:
    If people were afraid that Nvidia was going to raise licensing fees, just wait until they see what a bunch of maximize profits at all costs investors do to their licensing fees. ARM has lost money multiple times in recent years. That's not going to work going forward.

    NVIDIA has a proven track record of hurting clients, and ever increasing margins with monopolistic anti competitive behavior. I'll take my chances with soft bank leadership.
    Reply
  • spongiemaster
    digitalgriffin said:
    NVIDIA has a proven track record of screwing over clients and ever increasing margins with monopolistic anti competitive behavior. I'll take my chances with soft bank leadership.
    Softbank approached Nvidia about selling ARM to them. They originally told ARM to do what they needed to do, and not worry about profits. After multiple years of losing money, it sure looks like Softbank isn't interested in that strategy anymore. Who knows what the future will hold for ARM, but the status quo is not a financially viable long-term strategy.
    Reply
  • digitalgriffin
    spongiemaster said:
    Softbank approached Nvidia about selling ARM to them. They originally told ARM to do what they needed to do, and not worry about profits. After multiple years of losing money, it sure looks like Softbank isn't interested in that strategy anymore. Who knows what the future will hold for ARM, but the status quo is not a financially viable long-term strategy.

    Again, NVIDIA hasn't ever been known for their generosity. EVER. They are anti competitive and hence why multiple country regulatory agencies were fighting them.

    There were failing nForce chipsets.

    There were failing laptop motherboards due to bad solder joints on the BGA which were done according to NVIDIA specs.

    The reason Microsoft uses AMD is because NVIDIA just didn't want to play ball.

    Then there was the NPP Program which is anti competitive.

    The renaming of products from adaptive sync to G-Sync compatible....to make it look like it's one of their ideas/products.

    And once NVIDIA owned them, it would be much harder to stop them from transforming licensing to be anti competitive or egregious. Looked at what happened to Phys-X and support of previous products. Or how they used DCMA and various driver updates to prevent Phys-X to work when AMD cards were mixed in. I mean 3rd party developers were offering this (and GLide drivers) for free, and NVIDIA shut them down EACH time.

    There are more examples of NVIDIA's anti competitive behavior where they use their weight to an unfair advantage.

    And look what happened to Facebook + Occulus. Facebook PROMSED and swore up and down that they would NEVER tie facebook accounts to Occulus. They took that back within two years, making facebook accounts mandatory. You can't use a fake account either, or risk losing your library of games you paid for.

    That's another company I hope is broken up for anti competitive behavior. The decline of facebook is something I am actually pleased to see because it means people are wising up and are valuing their own mental health + privacy.
    Reply
  • spongiemaster
    I'm not talking about Nvidia. I'm talking about ARM. They are not in a great spot right now. You said yourself that going public could have some very negative implications for the company, and I agree. This isn't anything to be celebrating.
    Reply
  • InvalidError
    renz496 said:
    but seriously rather than nvidia isn't that softbank that losing the most in this deal? can they even make back the kind of money they initially spend on ARM?
    Unless people suddenly quit using ARM, I have no doubt SoftBank will eventually make back the 32G$ it initially paid for it. If ARM as a self-contained unit earns 1G$ net per year, it'll take 30+ years to make back the capital and several more years on top to cover interests and inflation. SoftBank likely hopes the IPO will get them there much quicker.
    Reply
  • VforV
    digitalgriffin said:
    Again, NVIDIA hasn't ever been known for their generosity. EVER. They are anti competitive and hence why multiple country regulatory agencies were fighting them.

    There were failing nForce chipsets.

    There were failing laptop motherboards due to bad solder joints on the BGA where were done according to NVIDIA specs.

    The reason Microsoft uses AMD is because NVIDIA just didn't want to play ball.

    Then there was the NPP Program which is anti competitive.

    The renaming of products from adaptive sync to G-Sync compatible....to make it look like it's one of their ideas/products.

    And once NVIDIA owned them, it would be much harder to stop them from transforming licensing to be anti competitive or egregious. Looked at what happened to Phys-X and support of previous products. Or how they used DCMA and various driver updates to prevent Phys-X to work when AMD cards were mixed in. I mean 3rd party developers were offering this (and GLide drivers) for free, and NVIDIA shut them down EACH time.

    There are more examples of NVIDIA's anti competitive behavior where they use their weight to an unfair advantage.

    And look what happened to Facebook + Occulus. Facebook PROMSED and swore up and down that they would NEVER tie facebook accounts to Occulus. They took that back within two years, making facebook accounts mandatory. You can't use a fake account either, or risk losing your library of games you paid for.

    That's another company I hope is broken up for anti competitive behavior. The decline of facebook is something I am actually pleased to see because it means people are wising up and are valuing their own mental health + privacy.
    I will raise all your anti-competitive valid points about nvidia with some of the scummy and BS things they did like:

    selling the 2080 Ti for over 70% price increase over the 1080 Ti while giving only 30% more performance for that price, $1200 from $700.
    lying and BS-ing about RTX and DLSS for 1.5 years with only 2-3 games supporting them, with horrible implementations for both techs.
    raising the prices again with 3090 at $1500 while being only 10-15% better, at best, than the 3080 at $700.- shouting from the rooftops that they "care for gamers" while selling directly to miners.realizing the mistake with the 3080 being so "cheap" and making it continually unavailable since launch to gamer and selling it directly to miners.
    launching too many SKUs in the upper tiers to confuse and milk every 5% perf increase possible from fools with more money than sense: 3080 to 3080 Ti to 3090 to 3090 Ti (?).- shouting from the rooftops that they "care for gamers" while selling directly to miners.- giving those gamer fools false hope with LHR models only to give the miners their driver unlocks directly, while never improving the situation at all.
    - shouting from the rooftops that they "care for gamers" while selling directly to miners.- lunching 3080 12 GB without an MSRP because there are to many fools with more money than sense or common sense or sane principles to actually notice how big of a mockery that is and the precedent it makes.
    - shouting from the rooftops that they "care for gamers" while selling directly to miners.- 3080 12GB without MSRP will probabaly be the start, 3090 Ti and 3070 Ti 16GB most likely will follow the same strategy, no more MSRP.
    - shouting from the rooftops that they "care for gamers" while selling directly to miners.
    And then comes Lovelace, with all the BS done before it, imagine the BS it will bring... no MSRP or $3000 - $4000 - $5000 price tags, take your pick.

    Ngreedia is a great company. Yes.

    edit: great auto-format on this forum. :rolleyes:
    Reply