Got a tip for us?
Let us know
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
Nvidia Abandons Arm Acquisition in Face of 'Significant Regulatory Challenges'
- Thread starter MacRumors
- Start date
- Sort by reaction score
NVIDIA make their own chips and are considered one of the worlds largest chip makers. If you web search 'top chip makers' or 'top semiconductor makers', NVIDIA is always in top 10 of those lists.
I agree, but the problem is what legal pretext the UK government could have found to stop one private-sector holding company buying another, apart from some true, but hand-wavey "national interest" argument. I don't think there was any obvious regulatory/anti-competition angle. Even the directors of ARM can't do much if someone comes along and offers the shareholders a big wedge of money. Of course, our wonderful government was also in turmoil over brexit at the time (hang on, what do I mean 'was'...?)
Look at all these headline readers.
Anyone with a finger in the pulse knows this deal (technically) is still happening.
The CEO just stepped down (odd)
An ex nvidia employee is now the CEO. They announced an IPO. What do you think is going to happen here guys….
Anyone with a finger in the pulse knows this deal (technically) is still happening.
The CEO just stepped down (odd)
An ex nvidia employee is now the CEO. They announced an IPO. What do you think is going to happen here guys….
SoftBank has said they are going to sell publicly with availability later this year. Seeing them as a publicly traded company is the best we can hope for I think.
NVIDIA's nearly 5X smaller than Apple.
So if it was rejected with NVIDIA, the rejection will be 5X faster with Apple, and 5X bigger... sorry, I meant thinner.
How is Nvidia going to buy Arm without the approval of the U.S., U.K., and other governments?
An ex nvidia employee is now the CEO. The old CEO stepped down. They announced an IPO, all in the same day.
Isn’t it clear? Nvidia won’t buy ARM, they will just buy majority shares and have voting power on the board, on top of the ex nvidia CEO. They own it.
The regulators will look at this also because it is known as getting a company via the back door, which means basically that a company wanting to own another company but is stopped by regulators will over a number of years start to purchase shares in the company they want to own. Then after a number of years, they will purchase more shares that hit the magically number where they are then legally allowed to make a bid for the rest of the shares to own the company outright.
NVIDIA could in theory work out a deal with Softbank to say dont sell ARM, keep it but we will keep on buying ARM shares over the next X amount of years, during that time NVIDIA and Softbank will work together to move ARM forward onto bigger and better things and then NVIDIA could buy up more shares that hits a countries mark which allows them to make a legal bid to buy up the last remaining shares to own the company. Doing it this way could force the regulator to allow the sale to go through because if they refuse NVIDIA could just turn round and say 'ok, we will dump the shares we own in ARM' which would cause a massive problem for ARM. Would they do it this way, who knows.
Then you need to tell all the websites that say they do that they are wrong and thus to ammend their website.
websearch 'Top 10 chip makers'
10 Largest Semiconductor Companies In The World - Zippia
Largest Semiconductor Companies Research Summary The largest semiconductor company in the world is Taiwan Semiconductor Manufacturing Co. which made $75.88 billion in revenue in 2022. The global semiconductor industry market size was $574.1 billion in 2022 1.15 trillion semiconductor units were...
9. NVIDIA
10 Biggest Semiconductor Companies
With Samsung leading the pack, these are the 10 biggest semiconductor companies by 12-month trailing revenue.
8. NVIDIA
Top Semiconductor Companies in World - Best 50 Companies
Top Semiconductor Companies - List of Top 50 Semiconductor Companies in World - Semiconductor Manufacturers and Suppliers.
www.electronicsandyou.com
10. NVIDIA
want me to go on, or are you still saying you are right that NVIDIA is not a chip maker?
Being a chip manufacturer is superfluous to the core issue. Arm is a contract R&D. They do shared R&D for a relatively large group of tech industry companies. The potential lack of sharing among the entire group is the entire issue. Apple has lots of interesting in sharing (i.e. lowering) R&D costs for Arm development. Apple holding the rights to that shared R&D would threaten all the other contributors. If don't play nice with Apple they could cut you off.
That thing is just as bad for Apple as it is Nvidia ( or Microsoft or Google. or Amazon or any other mega billion dollar tech company). Apple's track record for "sharing" after they purchase is about zero. Apple bought Intel's modem business.... does any expect that any other company will ever get their hands on a Apple cellular modem? No. If that answer is no then Apple having Arm is about 100x as bad.
Yes there is an impediment. Apple taking Arm private and off the market would be great consumer harm and exactly why the governments won't let even the potential for that to happen see light of day.
But yes there is no sound financial reason for Apple to buy Arm in its entirety. Especially at the prices that Softbank wants to cover up overpaying for it in the first place (and other FUBAR moves they made over last several years ). That's part of the major problem here. Any one big tech player who grossly overpays for Arm is likely to do something to get their money back. The larger the sum the larger the likely that it would not be "fair play among as wide a group as possible" approach.
At this point Nvidia's $60B+ was super crazy overpriced payment. Which makes it smell super bad.
This IPO could fall through too. If Softbank can not stoke the fire under the iPO price high enough then a good chance they won't sell.
Apple and 20 other large tech players could all buy 2% ( so get to a collective 40%). It isn't "board seat" that is the potential interest there. What trying to avoid is someone buying influence in Arm enough to do a "pump and dump". Some kind of vulture capital entity that will try to suck as much profit out of Arm , under fund R&D, and leave it a "creative destructive" husk .
The big problem is that for Arm to be run for maximum broad ecosystem effect it probably should be run pretty close to break even. As much money as prudent is always plowed back into R&D. Not stock buy backs or chasing short term quarterly (but long term bad) gimmicks to inflate the stock price.
If none of the big tech players by themselves have unilateral board seat moving control then it would be much closer to a "democracy" where everyone got a vote. Or at least more than just a stable oligopoly of players could run things. But a large enough block to scare aware all the "greenmail"/"activist investors" who have no problems running to effort into the ground to make a 'quick buck'.
No it isn't. Nvidia buying shares on the open stock market has pragmatically the same regulatory hurdles as Nvidia buying a wholly own subsidiary from Softbank. If the regulators didn't like it before, they aren't going to like it any better after an IPO. ( It might get marginally better looking because the overpayment for Arm isn't grossly and obviously way too high. But if the IPO goes at a price that Softbank is likely going to want it will still be too high to pass scrutiny. Nvidia is just as "embrace, extend , extinguish" standards player as they were before. There is no good reason to trust them. )
The CEO who just left was against going Public. It is a path were Arm has a large probability of attracting a group of owners looking to "make money fast" and Arm isn't a company can treat that way over a long period of time and still be relevant. Doing communal , contract R&D isn't a "make money fast" business. Under spend on R&D over long term and Arm will have high probability of dying due to some unforeseen hiccup.
Considering how buggy and slow the freestyle machines are maybe they should.
Except the regulators didn’t rule, nvidia backed out before the ruling happened.
Size isn't the relevant issue. ( at least outside of political "fighting for the little people .. down with billion dollar anything" spin cycles) . If Exxon or Pfizer showed up and wanted to buy Arm it wouldn't be a problem.
Arm is a communal tech resource and any one of the major players buying that up would be a problem. If AMD tried to buy it that would still be a problem. TSMC. Samsung . TI . etc.
Softbank somewhat flew under the radar because they were significantly enough split off from a cell phone service company. They didn't directly buy Arm IP products in any substantive way. So far enough away from the core community of Arm customers.
Regulators didn't publicly rule. Regulators DO provide feedback while they are looking. The questions they ask will pragmatically tell alot. If you are large player and it will be a large lawsuit , the government tells you before they sue. If can scare the crap out of a plantiff and avoid a trail that is way, way , way more effective both in time, money, and effort. The notion that Nvidia and Softbank have zero idea what the regulators were thinking is not anywhere near how the real world works.
...and back then, Apple weren't a chip maker and didn't make mobile phones, while the ARM processor was used in a range of 'niche' personal computers that had hardly sold outside the UK, and was just starting to find applications in mobile/embedded devices such as set-top-boxes (one of the designers was also a whiz at video compression). Who owned it was a total non-issue.
...now it dominates the entire mobile phone industry and is rapidly penetrating the PC and server market. Things change.
Nvida wins too.
".. Nvidia would end up paying around $66 billion. Nvidia either just lost $1.25 billion or saved $64.75 billion. In business as in life, it's all a matter of perspective. ... "
The Nvidia-Arm Deal is Dead; Softbank to IPO UK Chip Designer
The Nvidia dream of acquiring one of the most important IP designers in the world, Arm, is no more.
Most of that $60B was in 'monopoly game' money stock; not cash. But even the cash part was way , way bigger than the $1.25B. As long as Softbank took the 1.25 and fully invested in Arm's sever IP and related tech then Nvidia will get some incremental benefit over the longer term anyway. If Softbank had gone Scrooge McDuck on allowing Arm to make reasonable R&D investments over the last 1.5 years or so then Nvidia ( and most of the other Arm licensees ) would be in worse shape. Paying Softbank to stop them from doing something stupid was probably worth it.
IF the IPO path ends up throttling R&D investment by Arm into new tech then the Nvidia helped kick the can out another couple of years. An IPO will probably keep it out of any of Nvidia's major competitors hands also. This on paper $60B that Nvidia was going to pay will probably help inflate the IPO price that Softank is going to float. ( Softbank wants $38B for Arm... Nvidia was about to pay $60B ... what a bargain ... buy , buy , buy , buy ).
If the crypto mania stops over inflating GPU prices over the next 2 years Nvidia probably has far better uses for that 50+ billion of market cap ( even if it doesn't shrink substantially ).