The Deal That Got Away: NVIDIA Calls Off Acquisition of Arm

By Jim Lundy

NVIDIA calls off its acquisition of Arm–and its quest to dominate the semiconductor industry after announcing last year that it was acquiring Softbank’s Arm holding unit. 

As the acquisition dragged on it appeared that key government approvals were not happening.  So it’s no surprise that NVIDIA and Arm called off the deal. This blog discusses the future of NVIDIA and Arm as separate companies. 

Why Did NVIDIA And Arm Call Off Their Merger?

It was probably UK regulators that promised to launch an investigation that led to the deal falling apart. Clearly based on the canceled deal, Arm now continues as a standalone company that might IPO. NVIDIA now falls woefully short of its goal to top Intel in tech semiconductors.

Arm and the Challenge From the RISC-V Movement

Arm still dominates in mobile computing with Apple, Samsung, and even Microsoft as major customers. Arm also sees its designs now showing up in many devices, such as smart TVs, printers, consumer devices (laundry equipment, thermostats, etc.), and cars. 

However, there is movement in the semiconductor industry with the risk of the movement taking on new backers, including Intel. No one likes a single company or architecture to dominate. So Aragon feels that the RISC-V movement could represent a long-term threat to Arm. 

In fact, on February 7th, Intel announced it was joining RISC-V International as a premier member. Intel will be contributing some of its IP to the community to help it innovate. 

What is Next for Arm?

Softbank, the owner of Arm, indicated that they were looking at an IPO for Arm. However, as recently as December, Softbank and Arm told UK regulators that an IPO would not be good for Arm (this was to bolster the chances of the NVIDIA deal being approved). So while we expect an IPO to happen for Arm, the road to getting a traditional IPO is still tedious. We don’t think Softbank would do a SPAC (special purpose acquisition company), but that remains as an option to do a deal faster.

Bottom Line

NVIDIA now has to do it alone – but not having Arm won’t really impact its current growth trajectory. That being said, its unstated goal of topping Intel takes a hit with the Arm deal off the table. Arm is still dominating in Mobile and shows no signs of slowing down. The question is, will there be any other deals that come forward before the IPO deal gets done. Developing.