Nvidia scraps $66 billion plan to acquire mobile chip designer Arm

Nvidia scraps $66 billion plan to acquire mobile chip designer Arm

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FTC moves to block Nvidia's acquisition of Arm
Regulators didn't like the idea of Nvidia and Arm merging together.
Image: Arm/Nvidia/Cult of Mac

Nvidia on Monday backed out of a deal to acquire mobile chip designer Arm for $66 billion, according to reports. It would have been the largest ever sale in the semiconductor industry, but regulators including the FTC weren’t keen on it.

SoftBank, the Japanese company that currently owns Arm, still expects to sell it by the end of the year through an initial public offering.

Nvidia drops deal to buy Arm

Nvidia’s plan to buy Arm was first revealed in September 2020, at which point the deal was believed to be worth around $40 billion. Nvidia CEO Jensen Huang said the move would bring “tremendous benefits for both companies.”

However, there were concerns the acquisition would have the opposite effect for the many companies that rely on Arm technology — which include Apple, Samsung and Qualcomm. So, late last year, the FTC filed a lawsuit to stop it.

The FTC warned the move would “distort Arm’s incentives in chip markets” and allow both companies to “unfairly undermine Nvidia’s rivals.” It wanted its lawsuit to “prevent a chip conglomerate from stifling the innovation pipeline.”

Other regulators in the U.S. and Europe also had concerns about the merger.

Arm will still be sold

It now looks like the FTC’s legal action achieved its aim. Nvidia this week backed out of the deal to acquire Arm, Financial Times reports. It will pay SoftBank $1.25 billion in compensation for the cancellation.

SoftBank still plans to sell Arm this year. But because it seems unlikely a sale to another big tech company will go through, it is said to be planning an initial public offering instead.