Why did Nvidia’s ARM acquisition fail?

On February 8, semiconductor giant Nvidia released a joint statement saying the deal had been canceled due to “significant legal challenges”.

But is this deal “fake” from the beginning?

Back in September 2020, the news of Nvidia’s ARM acquisition created a huge buzz, both claiming to create “the world’s leading computing company in the AI ​​era”.

Criticism immediately surfaced. Herman Hauser, the entrepreneur credited with developing the first ARM microprocessor, strongly opposed the deal. British lawmakers, including the opposition business minister, Ed Miliband, and other tech giants such as Qualcomm, Google and Microsoft, are of the same opinion.

Opponents argue that the acquisition deal could negatively impact technological sovereignty. However, the main issue of the deal revolved around access to ARM’s advanced chip designs.

ARM is licensing its “architecture” to hundreds of partners around the world. Apple uses them in iPhones and iPads, Amazon uses them in Kindles, and car manufacturers also use these chip designs in transportation.

In the event that Nvidia stops licensing other companies to use ARM’s chip designs in their semiconductor products, the impact will be huge.

Even before lawmakers from the US, UK, China and Europe launched an investigation into the deal, leading tech investors and analysts were already speculating that the acquisition would never take place. is approved.

Nvidia and ARM both tried to convince lawmakers, saying they would invest heavily in ARM and allow other companies to continue using the company’s processor design. However, all efforts were in vain.

The “jewel” of the semiconductor industry in fog

ARM, a company based in Cambridge, UK, was acquired by SoftBank for £32 billion in 2016.

Before that, ARM was spun off from the original computing company called Acorn Computers in 1990. The company’s energy-efficient microprocessor architecture is being used in 95% of smartphones worldwide and 95% of the time. The chip is being designed in China. Currently ARM has more than 6,000 employees worldwide, 3,000 employees in the UK and is considered the “jewel” of the foggy technology industry.

Geoff Blaber, CEO of analytics firm CCS Insight, said that from the start the deal was subject to intense pressure and scrutiny.

“ It is not surprising that this deal ended in failure. Finding a way to appease lawmakers while maintaining value and justifying the price tag of more than 40 billion USD is too big of a challenge ,” said CCS Insight leader.

” We saw this acquisition going to face great difficulty as early as 2020, mainly from partners that are licensed from ARM, who produce up to 22 billion processors a year ,” Blaber shared.

As expected, the strong outcry shows ARM’s technological strategic importance, and will be a factor for ARM to remain independent.

Meanwhile, SoftBank is planning to put ARM on the stock exchange in 2023. However, it is not known if the company will list in the UK or the US, where technology companies tend to be valued higher.

“ The IPO is a much better option for the ARM ecosystem, but it is unlikely to give SoftBank the same return ,” Blaber said.

Russ Shaw, founder of lobbying group Tech London Advocates, stressed the need for ARM to conduct an IPO in the UK.

” Now that the deal is officially closed, the UK needs to focus on maintaining ownership of one of its most valuable technology assets, ” he said.

The global chip shortage has led many countries to think about investing more in semiconductor design and manufacturing. The European Union has announced a multi-billion dollar plan to boost microprocessor production across the bloc.

Shaw asserts: “ With the global microprocessor crisis showing no signs of abating, affecting all industries and everyday life, companies like ARM have an important role to play in this. maintaining the UK’s technological and economic position. We simply have to protect our digital sovereignty, by maintaining ownership of ARM, the jewel in the semiconductor industry .”

According to CNBC