Plans to sell Arm failed or will IPO Nvidia had warned of "market ruthlessness"

On February 8, a number of media reported that SoftBank Group's sale of British chip company Arm to Nvidia failed, and Arm planned to IPO, which is expected to reach $80 billion.

In response to the above news, NVIDIA did not comment to the first financial reporter. SoftBank's opening stock rose nearly 1% on the day.

The sources also said Arm CEO Simon Segars had hinted he intended to resign and hand over the job to Arm president Rene Haas.

The deal was announced in 2020 but faces regulatory hurdles from around the globe and a combined backlash from competitors. The U.S. Federal Trade Commission (FTC) sued in December to block the deal, arguing that if Nvidia buys Arm, it could hurt competition in emerging markets such as self-driving car chips and new network chips.

Fears of pushing up market prices and reducing user choice, hurting innovation, the acquisition has also come under scrutiny from UK and EU regulators.

The sale of Arm is important for the cash of the currently declining SoftBank, which bought Arm for $32 billion.

Arm chips are widely used in a variety of devices such as smartphones and computers, and license their chip architecture and technology to customers such as Qualcomm, Apple, and Samsung Electronics.

With the strength of its graphics processor chip GPU, NVIDIA has become the most valuable chip company in the United States. While gaming remains the most important industry for NVIDIA GPUs, graphics processors have been more widely used in other emerging areas such as artificial intelligence and data centers.

The acquisition of Arm will also help Nvidia better compete with companies such as Intel and AMD in the data center chip market.

The value of the deal, which is based on Nvidia's share price, was initially set at around $40 billion and rose to $80 billion late last year as Nvidia's stock price rose, though it has been falling since then.

An Nvidia spokesperson responded to questions about the deal last month, saying in a joint "letter" with Arm to the UK's Competition and Markets Authority (CMA) that the acquisition "provides an opportunity to accelerate Arm and promote competition and innovation".

Nvidia also said that going to market Arm is not a good option. "Some market participants have suggested that SoftBank list Arm, though the IPO will force Arm to narrow the areas it focuses on and reduce investment in new technologies," the company said. ”

Nvidia said people were exaggerating Arm's market power. The company said Arm's financial situation is not optimistic and needs more financial support. The documents from both companies read: "Some idealistically believe that Arm will be popular after an IPO in the UK and therefore can drive high valuations in the market. But the open market is not emotional, and the capital market needs profitability and performance. ”

Market participants believe that even if the acquisition of Arm fails, it will not adversely affect NVIDIA. The company's stock price has risen 82 percent over the past year. Nvidia will announce its latest quarterly earnings report on February 16.

Nvidia founder CEO Jen-Hsun Huang admitted in a conversation with Simon Sigas last year: "The tide of computing change is reshaping the technology market landscape. NVIDIA itself is also very good, not necessarily to acquire Arm, we do this because we want to make computers more powerful, Arm independence does not mean strong, no one needs fragile independence. ”

Kevin Krewell, an analyst at Tirias Research, told First Financial: "The challenge for Nvidia will be how to guide Arm to find the right balance between achieving the common goals of Nvidia and Arm, and provided that this approach does not damage the latter's position in the market as an independent IP provider." ”

According to the Financial Times, citing people familiar with the matter, if the deal is not reached, then SoftBank will receive a break-up fee of up to $1.25 billion.