NVIDIA officially abandons its plans to purchase ARM

The original $40 billion cash-and-stock deal is currently valued at over $60 billion.

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NVIDIA's has abandoned its plans to purchase ARM, the UK-based business that licenses chip technology used in most smartphones, NVIDIA and Softbank announced. The deal collapsed on Monday, a year and a half after NVIDIA revealed that it was purchasing the Softbank-owned chip business for cash and stock then valued at $40 billion. Based on NVIDIA's current stock prices, the deal would've been worth over $60 billion if it had gone through today.

"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. "Though we won’t be one company, we will partner closely with ARM. I expect ARM to be the most important CPU architecture of the next decade."

The planned takeover was met with opposition from the start. ARM customers Qualcomm and Microsoft objected to the deal, raising concerns that NVIDIA might prevent ARM from licensing its chip designs. The massive acquisition, which would've been the largest in the chip sector, was also intensely scrutinized by regulators. UK's Competition & Markets Authority investigated it twice over its impact product prices and quality, as well as on its implications on national security.

In the US, the Federal Trade Commission sued to block the purchase over concerns that it would stifle competition for multiple technologies. Previous reports said NVIDIA has been preparing to walk away from the deal since early January, seeing as it has made little progress on convincing regulators to approve the purchase.

As The New York Times notes, NVIDIA repeatedly told authorities that it will keep ARM's business model and even proposed to set up a separate licensing entity for its chip designs. It also said that it will license any ARM-based IP that it develops to all companies without discrimination. "There is no evidence that a combined NVIDIA and ARM would have either the ability or the incentive to harm competition," its lawyers said in a response to FTC's lawsuit.

ARM-owner Softbank will get a break fee of up to $1.25 billion as a result of the failed purchase, the sources said. SoftBank confirmed that it would take ARM public, though it didn't provide any further details.

"ARM is becoming a center of innovation not only in the mobile phone revolution, but also in cloud computing, automotive, the Internet of Things and the metaverse, and has entered its second growth phase,” said SoftBank CEO Masayoshi Son. "We will take this opportunity and start preparing to take ARM public, and to make even further progress."

Update February 8, 2022 2:46 AM ET: The post has been updated with NVIDIA and SoftBank's official announcement that NVIDIA has ended its plans to acquire ARM.

Steve Dent contributed to this post.