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SoftBank to Take Chip-Design Subsidiary Public After Nvidia Deal Fails

February 8, 2022

3 min Read

Written by Dawn Allcot

Edited by Nicholas Morine

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SoftBank’s semiconductor and software design subsidiary, Arm Limited, has announced plans to release an initial public offering within the next fiscal year. Nvidia had planned to acquire Arm from SoftBank, but the deal fell through due to “significant regulatory challenges,” according to a joint press release from SoftBank and Nvidia.

Arm currently designs processing chips for smartphones — including Apple iPhones and Android devices that use Qualcomm processors. Microsoft and Qualcomm had publicly opposed the deal when it was announced in 2020. Arm had been valuated at $40 billion in Nvidia stock and cash, CNBC reported.

FTC Questioned the Acquisition

The U.S. Federal Trade Commission (FTC) and U.K. competition authorities both questioned the deal last year. CNBC reported that in Dec. 2021, the FTC had stated, “The proposed vertical deal would give one of the largest chip companies control over the computing technology and designs that rival firms rely on to develop their own competing chips.”

However, a close relationship will remain between Arm and Nvidia. “Arm has a bright future, and we’ll continue to support them as a proud licensee for decades to come,” Jensen Huang, founder and chief executive officer of Nvidia, said in a press release. He added that Nvidia will continue to partner closely with Arm, and that he expects the company to expand “beyond client computing to supercomputing, cloud, AI, and robotics.”

SoftBank CEO Remains Optimistic

SoftBank Group Corp. (planning the Arm IPO before March 31, 2023) also believes in the power of Arm as the chip company moves into its secondary growth stage. Masayoshi Son, CEO of SoftBank, pointed out in the joint release: “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.”

Even though the deal between Nvidia and SoftBank fell through despite good faith efforts from both parties, SoftBank will retain $1.25 billion prepaid by Nvidia and Nvidia will retain a 20-year licensing agreement with Arm, according to the press release.

CNBC also reported that Arm CEO Simon Segars had stepped down, with Rene Haas taking the lead in the corporation. Son said, “Rene is the right leader to accelerate Arm’s growth as the company starts making preparations to re-enter the public markets.”

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