Japanese conglomerate SoftBank Group Corp. has scrapped its sale of semiconductor company ARM Ltd., abandoning a record-breaking $80 billion deal with California-based Nvidia Corporation. Citing regulatory obstacles, SoftBank will prepare the chip designer for a public offering instead.
ARM makes chips for smartphones, computers, and other devices used by manufacturers including Apple, Qualcomm Inc., and Samsung Electronics Co. Ltd. SoftBank acquired the British company in 2016 for $32 billion.
Had Nvidia acquired ARM, the computer design company would have been better positioned to compete with rivals Intel and Advanced Micro Devices Inc. (AMD). Nvidia’s graphic processor chips are its core strength. They have long been integral to gaming and are becoming increasingly needed in artificial intelligence and other emerging fields. The tech leader will retain its 20-year ARM license, according to a company statement.
SoftBank had already received a $1.25 billion fee from Nvidia at signing and said that the funds would be “recognized as profit” in the quarter ending in March.
The Federal Trade Commission sued to block the cash-and-stock deal when it was announced in 2020, claiming that competition in the chip sector could be hampered, particularly in the new networking and self-driving car markets. The combined company, the suit said, would have excessive control over chip design and technology. The European Union launched an investigation into the deal in 2021, and China also expressed dissatisfaction with the merger. Both would have had to give regulatory approval, along with the U.K. and U.S., for the buyout to have materialized.
Cancellation of the deal highlights the hesitation among governments and antitrust regulators to approve huge deals in the tech space, particularly in the semiconductor industry.
The deal would have been the industry’s largest, exceeding Avago’s acquisition of Broadcom in 2015, according to Dealogic.
ARM has recently named a new CEO, Rene Haas, who will replace Simon Segars, a 30-year executive with the company.