Arm prepares for public offering and announces new CEO as NVIDIA scraps $40bn bid to acquire it
NVIDIA has scrapped its $40bn bid to buy Cambridge-based Arm, which has now appointed a new CEO and is preparing for a public offering.
The US tech giant cited the “significant regulatory challenges” to the deal as the reason it is walking away from its attempts to acquire the computer chip designer from Japanese conglomerate Softbank.
Arm responded by appointing Rene Haas as successor to Simon Segars as Arm CEO.
Masayoshi Son, chairman and CEO of SoftBank Group Corp, said: “Rene is the right leader to accelerate Arm’s growth as the company starts making preparations to re-enter the public markets. I would like to thank Simon for his leadership, contributions and dedication to Arm over the past 30 years.”
And Jensen Huang, founder and CEO of NVIDIA, said: “Arm has a bright future, and we’ll continue to support them as a proud licensee for decades to come.
“Arm is at the center of the important dynamics in computing. Though we won’t be one company, we will partner closely with Arm.
“The significant investments that Masa has made have positioned Arm to expand the reach of the Arm CPU beyond client computing to supercomputing, cloud, AI and robotics. I expect Arm to be the most important CPU architecture of the next decade.”
NVIDIA’s bid to buy Arm, announced September 2020, collapsed in the face of mounting questions over its impact.
The UK’s Competition and Markets Authority (CMA) raised concerns last August that the merger might restrict the access of NVIDIA’s rivals to Arm’s technology, which is licensed to firms making semiconductor chips and other products.
Arm’s technology is found in most of the world’s smartphones, including Apple’s and Samsung’s, along with computers and devices.
Concerns that its famous ‘Switzerland’ business model of licensing were at risk persisted, despite NVIDIA insisting it would be retained.
The European Commission announced an in-depth probe into the deal in October 2021, and a month later culture secretary Nadine Dorries ordered a phase two investigation on national security and competition grounds in November.
The Federal Trade Commission - a US government agency - then announced it was suing NVIDIA to block the deal and prevent competition and innovation being stifled.
Further hurdles were expected in China.
SoftBank said it was confident Arm’s technology and intellectual property would “continue to be at the centre of mobile computing and the development of artificial intelligence” and would work with the company on a public offering of Arm within the fiscal year ending March 31, 2023.
“Arm is becoming a centre 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 Mr Son. “We will take this opportunity and start preparing to take Arm public, and to make even further progress.
“I want to thank Jensen and his talented team at NVIDIA for trying to bring together these two great companies and wish them all the success.”
SoftBank will retain the $1.25billion prepaid by NVIDIA, while NVIDIA will retain its 20-year Arm licence.
Arm’s new CEO, Mr Haas, said: “It is an honour to lead the world’s most influential technology company at a time when Arm’s market opportunity has never been greater.
“As the innovators of the industry’s most pervasive computer architecture, Arm changed lives around the globe by delivering the technology at the heart of the smartphone revolution. We are now uniquely positioned to address the diverse demands of AI, cloud, IoT, automotive and the metaverse. And with the uncertainty of the past several months behind us, we are emboldened by a renewed energy to move into a growth strategy and change lives around the world - again.”
NVIDIA had pledged to create an AI centre of excellence in Cambridge and launched the UK’s most powerful supercomputer, the Cambridge-1.
Arm’s new CEO, Mr Haas, has served as president of Arm IP Products Group (IPG) since 2017.
Arm said that under his leadership IPG’s investments, and work on growth markets such as infrastructure and automotive, had brought Alibaba, Ampere, AWS, Bosch, Denso, Mobileye and Telechips into Arm’s ecosystem, putting the company on track to achieve record royalty revenue, licensing revenue and profits in the current financial year.
Mr Haas joined Arm in 2013 and before that held several applications management, applications engineering and product engineering roles, including seven years at NVIDIA as vice president and general manager of its computing products business.
Mr Segars said: “Arm has defined my working life, and I am very thankful for being given the opportunity to grow from graduate engineer to CEO. I’m very bullish on Arm’s future success under Rene’s leadership and can’t think of any anyone better to lead the company through its next chapter.”
Cambridge’s Labour MP Daniel Zeichner said: “Today’s announcement that NVIDIA’s plans to buy Arm from Softbank have fallen through is hardly surprising. There has been a great deal of uncertainty surrounding this deal, stretching back to unusual circumstances under which SoftBank acquired the chip designer when the sale was hurriedly announced by the Conservative government to shore up confidence after the 2016 Brexit referendum.
“The UK government cannot allow this hit and miss approach to continue. What is needed is a concrete policy for keeping strategic assets in the UK and protecting jobs.”
Mike Clancy, general secretary of Prospect, the union for tech workers, said: “This news is just the latest development in a period of huge uncertainty for Arm's workforce.
“As a union we have long warned that whatever the ownership structure it must ensure the preservation of both jobs and research and development spending.
“The Prime Minister has talked about restoring Britain’s place as a scientific superpower. Protecting one of the UK’s flagship tech innovation companies must be the first step in achieving this.”
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