NVIDIA-Arm Acquisition Officially Nixed, SoftBank to IPO Arm Insteadby Ryan Smith on February 8, 2022 6:00 AM EST
NVIDIA’s year-and-a-half long effort to acquire Arm has come to an end this morning, as NVIDIA and Arm owner SoftBank have announced that the two companies are officially calling off the acquisition. Citing the current lack of regulatory approval of the deal and the multiple investigations that have been opened up into it, NVIDIA and SoftBank are giving up on their acquisition efforts, as the two firms no longer believe it will be possible to receive the necessary regulatory approvals needed to close the deal. In lieu of being able to sell Arm to NVIDIA (or seemingly anyone else), SoftBank is announcing that they will instead be taking Arm public.
First announced back in September of 2020, SoftBank and NVIDIA unveiled what was at the time a $40 billion deal to have NVIDIA acquire the widely popular IP firm. And though the two companies expected some regulatory headwind given the size of the deal and the importance of Arm’s IP to the broader technology ecosystem – Arm’s IP is in many chips in one form or another – SoftBank and NVIDIA still expected to eventually win regulatory approval.
However, after 17 months, it has become increasingly clear that government regulators were not apt to approve the deal. Even with concessions being made by NVIDIA, European Union regulators ended up opening an investigation into the acquisition, Chinese regulators have held off on approving the deal, and US regulators moved to outright block it. Concerns raised by regulators centered around NVIDIA gaining an unfair advantage over other companies who use Arm’s IP, both by controlling the direction of its development and by their position affording NVIDIA unique access to insights about what products Arm customers were developing – some of which would include products being designed to compete with NVIDIA’s own wares. Ultimately, regulators have shown a strong interest in retaining a competitive landscape for chips, with the belief that such a landscape wouldn’t be possible if Arm was owned by a chip designer such as NVIDIA.
As a result of these regulatory hurdles, NVIDIA and SoftBank have formally called off the acquisition, and the situation between the two companies is effectively returning to status quo. According to NVIDIA, the company will be retaining its 20 year Arm license, which will allow the company to continue developing and selling chips based around Arm IP and the Arm CPU architecture. Meanwhile SoftBank has received a $1.25 billion breakup fee from NVIDIA as a contractual consequence of the acquisition not going through.
In lieu of selling Arm to NVIDIA, SoftBank is now going to be preparing to take Arm public. According to the investment group, they are intending to IPO the company by the end of their next fiscal year, which ends on March 23rd of 2023 – essentially giving SoftBank a bit over a year to get the IPO organized. Meanwhile, according to Reuters, SoftBank’s CEO Masayoshi Son has indicated that the IPO will take place in the United States, most likely on the Nasdaq.
Once that IPO is completed, it will mark the second time that Arm has been a public company. Arm was a publicly-held company prior to the SoftBank acquisition in 2016, when SoftBank purchased the company for roughly $32 billion. And while it’s still too early to tell what Arm will be valued at a second time around, it goes without saying that SoftBank would like to turn a profit on the deal, which is why NVIDIA’s $40 billion offer was so enticing. Still, even with the popularity and ubiquity of Arm’s IP across the technology ecosystem, it’s not clear at this time whether SoftBank will be able to get something close to what they spent on Arm, in which case the investment firm is likely to end up taking a loss on the Arm acquisition.
Finally, the cancellation of the acquisition is also bringing some important changes to Arm itself. Simon Segars, Arm’s long-time CEO and major proponent of the acquisition, has stepped down from his position effective immediately. In his place, the Arm board of directors has already met and appointed Arm insider Rene Haas to the CEO position. Haas has been with Arm since 2013, and he has been president of the Arm IP Products Group since 2017.
Arm’s news release doesn’t offer any official insight into why Arm is changing CEOs at such a pivotal time. But with the collapse of the acquisition, Arm and SoftBank may be looking for a different kind of leader to take the company public over the next year.
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mode_13h - Thursday, February 10, 2022 - link> NVidia is selling their custom cores as fast as they can build them.
According to what/whom and why aren't they in Orin?
> they designed their custom cores for the Gracemont platform
"Gracemont" is the name of Intel's E-cores introduced in Alder Lake. Grace is the name of a Nvidia server CPU that's said to feature ARM Neoverse cores.
> NVidia has doubled down on the custom cores, not cancelled them.
Source? And I'm not talking about the little microcontroller-like RISC-V cores they have in their GPUs. We're talking like full-blown ARMv8-A cores that you could run Linux on.
Lakados - Thursday, February 10, 2022 - linkNVidia developed the A78AE cores used in it in conjunction with ARM, now that they’ve split I’m sure they are going to have to work out ownership for that.
Grace is based on Nanoverse but again heavily modified, not the stock cores.
NVidia’s custom arm cores are powering all their edge networking switches currently as well as all the AI for the drive assist. They also renewed their design license for their ability to make their own cores for another 20 years. Source 2 paragraphs up in this article were commenting on.
mode_13h - Friday, February 11, 2022 - link> NVidia developed the A78AE cores used in it in conjunction with ARM
Okay, so that's Nvidia collaborating with ARM to customize A78 cores for it, like how Qualcomm worked with ARM to build the X1. However, we still saw X1 cores show up in other SoCs, so my guess is that Nvidia didn't do most of the work and doesn't own that IP.
> now that they’ve split
No, they didn't split because they were never joined. Until the merger is approved and finalized, they're legally obligated to continue operating as separate entities.
> Grace is based on Nanoverse but again heavily modified, not the stock cores.
According to where? You realize that misspelling Neoverse doesn't exactly help your credibility.
Anyway, ARM offers an array of configuration options, when you buy IP from them. And, as mentioned above, they offer further customization for interested customers with deep enough pockets.
> NVidia’s custom arm cores are powering all their edge networking switches currently
Oh, I just figured out that you're talking about Mellanox! In what way are they "custom"?
> as well as all the AI for the drive assist.
Yeah, that's what we were talking about, above.
> They also renewed their design license
"According to NVIDIA, the company will be retaining its 20 year Arm license"
Retaining is very different than renewing. It could be nothing more than hedging their bets and doesn't necessarily commit them to designing more custom cores.
ballsystemlord - Tuesday, February 8, 2022 - link"ARM isn't making enough money off of licensing to survive..."
How can you tell?
Zen has ARM cores in it for their PSP. There's Apple's M* series of processors. There's cellphones.
And that's just off the top of my head! Did you know that ARM has micro-controllers also? This goes beyond Arduino, there's washers, smart thermostats, Amazon Echo, the list goes on and on and on.
How could you possibly conclude that they don't make enough money from licensing?
Incidentally, I know someone who wanted an ARM license, do you know how long the licensing process takes? 2 Years minimum! Yes! 2 years! If ARM needed more licencees to turn a profit, they'd be optimizing their licencing process, not selling to Nvidia or IPO-ing the company.
Spunjji - Wednesday, February 9, 2022 - linkAFAICT the "ARM isn't making enough money" thing is a meme being spread around comment sections by a specific sort of commenter who, shall we say, favours Nvidia for reasons that aren't made explicitly clear in their posts.
Universally there seems to be an inability to understand the difference between Softbank not making as much money as they'd like from ARM, and ARM itself not making enough money. They're never clear on how ARM having more licensees and market share than ever is somehow worse for their finances.
Lakados - Wednesday, February 9, 2022 - linkBecause ARM has posted losses every year since 2017, Apple, Samsung, Qualcomm, NVidia they spend more on designing their custom cores than ARM makes in revenue. ARM isn’t able to compete in the market they’ve created of their own product.
mode_13h - Thursday, February 10, 2022 - link> ARM has posted losses every year since 2017
Softbank being a private equity firm makes me skeptical of this. I don't know anything about Japanese corporate finance laws, but private equity firms in the US tend to be basically black boxes.
Lakados - Thursday, February 10, 2022 - linkMaybe we’ll see, I’m hoping ARM weathers this but Apples response of “we don’t use ARM, we use Apple Silicon” doesn’t inspire confidence. But I’m sure NVidia, Apple, Amazon, Samsung, and Qualcomm are going to be buying that stock.
SoftFox - Thursday, February 10, 2022 - linkI hear this a lot from commentators, but ARM has stated numerous times they don't intend to compete into 'bleeding edge' designs of any product category as it would affect there overall IP market.
They have a balancing act to negotiate between different customers who want a number of characteristics, for example IPC, efficiency, power usage etc. They cover so many markets from Micro Controllers, smart cards to networking and servers If they tip the cart to much one one direction then they would lose customers in the other as generally these are mutually exclusive qualities
If on the other hand a company comes along and requires a particular specialised design they are free to buy an architectural licence and build a core for their own needs.
Saying that they are trying to improve the range of IP offerings with for example the new Semi-Custom Cortex-X line which is like a bridge to a full custom core however its doubtful they would go the full way and try and replicate an Apple M1.
mode_13h - Friday, February 11, 2022 - link> They have a balancing act to negotiate between different customers
> who want a number of characteristics, for example IPC, efficiency, power usage etc.
They already have 3 or 4 tiers of mobile Cortex-A series cores and now 3 tiers of server cores (Neoverse E, N, and V). You can't get much more specialized than that!
> They cover so many markets from Micro Controllers
They have at least 2 categories of dedicated microcontroller cores, as well. The Cortex M and R-series.
> its doubtful they would go the full way and try and replicate an Apple M1.
Yes, they're not a SoC company. Still, they need to stay as close as possible to the CPU and GPU cores from Apple & others, if they want to remain relevant. I agree that they'll probably never be as highly-tuned as Apple's, but they can't afford to fall too far behind.