Nvidia inevitably gives up trying to buy Arm

US semiconductor giant Nvidia has decided to stop wasting everyone’s time over its futile attempt to gain control of the world’s main source of chip designs.

Nvidia’s bid to buy Arm from Japanese conglomerate Softbank was always a baffling move. Arm’s business model involves it licensing its cutting-edge chip designs to the likes of Nvidia… and all its competitors. How could it ever make sense to allow one of its ecosystem of customers to have complete control over Arm? The business incentives for Nvidia to abuse that position to competitive advantage are overwhelming and obvious.

So when the attempted M&A was announced a year and a half ago, it was clear that even a global regulatory system as semi-functional as the one we have would have some major reservations. So it turned out, when the US, UK and, eventually, Europe all pushed back. While those investigations have yet to conclude, Nvidia had presumably heard enough to make it fear the worst and has decided save regulators the bother of formally blocking the move.

“Arm has a bright future, and we’ll continue to support them as a proud licensee for decades to come,” said Jensen Huang, Nvidia CEO. “Arm is at the centre 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.”

On top of wasting everyone’s time and giving tech hacks something to write about, Nvidia handed over a $1.25 billion non-refundable deposit at the time of the bid, so that’s the easiest bil-and-a-quarter Softbank will ever make. “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,” said SoftBank boss Masayoshi Son.

“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,” he continued. “We will take this opportunity and start preparing to take Arm public, and to make even further progress.”

It was never that obvious why Softbank bought Arm in the first place. There was some standard platitudinous whittering about benefitting humanity and nods to IoT, but it was never explained why it was such a great idea for a telecoms conglomerate to own a chip designer. The real reason seems to be that Son is a compulsive deal-maker, speculator and corporate shopaholic. To what extent these tendencies benefit his investors is for them to determine.

Simon Segars, who has been ARM CEO since before the SoftBank acquisition, doesn’t seem to fancy the hassle of running a public company again and has decided to call it a day, to be replaced by Arm insider Rene Haas. Funnily enough Haas joined Arm from Nvidia back in 2013, so has been spared a reunion with his old boss.

“Arm has defined my working life, and I am very thankful for being given the opportunity to grow from graduate engineer to CEO,” said Segars. “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.” Not bullish enough to hang around though, eh Simon.

“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,” said Haas. “As the innovators of the industry’s most pervasive compute 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.”

This is clearly the correct outcome. There’s no way any major Arm licensee should be allowed to buy the company and reverting to public ownership is the best status for such a uniquely important firm. Both Nvidia and Softbank share prices were relatively unmoved by the news, indicating the failure of the bid was already priced in by investors who have a better grasp on reality than either Huang or Son do.