The biggest chip acquisition case has come to an end. What is the origin of Arm's break-up with Nvidia?

According to various media reports, SoftBank Group's deal to sell British chip company Arm to well-known chip manufacturer Nvidia failed. Nvidia (NVDA.US) will abandon the $66 billion acquisition of British chip company Arm from SoftBank, ending the largest deal in the chip industry's history.

The takeover deal came to an end

It was revealed that due to the failure of this deal, SoftBank has begun planning Arm's initial public offering.

SoftBank will receive $1.25 billion in break-up fees and seek to promote the listing of Arm during the fiscal year ending March 31, 2023.

Subsequently, Arm announced today that its board of directors has appointed Rene Haas as the new CEO. Rene has 35 years of experience in the semiconductor industry and will lead Arm to accelerate growth and prepare for an IPO. SoftBank Group Chairman and CEO Sun Zhengyi said, “Rene is the right leader to accelerate the company's growth as Arm prepares to relaunch its listing.”

Rene Haas also said, “As an innovator of the most popular computing architecture in this industry, Arm has transformed the lives of people around the world by providing the core technology for the smart phone revolution. Our unique market positioning advantages can meet the diverse needs of artificial intelligence, cloud, IoT, automotive, and metaverse. As months of uncertainty have passed, we are ready to move on to a new growth strategy that will once again change the world.”

Previously, in September 2020, Nvidia and SoftBank issued a statement announcing that Nvidia would acquire Arm for $40 billion. Due to the unprecedented scale of the deal, the acquisition attracted a lot of attention for a while.

If the acquisition passes, Nvidia will control Arm. This will allow Nvidia to be authorized by Arm architecture to fulfill its ambitious vision of integrating its leading computing platform with Arm's ecosystem. Nvidia believes that this acquisition will not only benefit Arm's future development and innovation, but also healthy competition in the market.

According to reports, the collapse of this acquisition was due to various factors. On the one hand, the acquisition hindered completion of the deal due to major regulatory challenges. Regulatory authorities in many countries are sensitive to this acquisition, believing that the success of this acquisition may damage competition in emerging markets such as autonomous vehicle chips, and lead to potential market monopolies, price increases, and stagnation in innovation.

On the other hand, the acquisition process was also resisted by investors. The price of the merger and acquisition rose as Nvidia's stock price rose, and the final transaction price of 80 billion US dollars was double that of when the transaction was initially disclosed. Whether Nvidia will be able to fulfill its vision in related fields after the acquisition is unknown.

What is the origin of Arm

Arm is the world's leading semiconductor intellectual property (IP) provider and is at the core of the development of digital electronic products. The company is headquartered in Cambridge, England, with more than 1,700 employees and multiple offices around the world.

Arm licenses design and technology to chip makers and is the foundation for almost every smartphone in the world. Additionally, the company has made progress in personal computers, automobiles, and data centers.

Arm's business model mainly involves the design and licensing of IP rather than the production and sale of actual semiconductor wafers. The company's partners can use Arm's IP design to create and produce system-on-chip designs, but are required to pay Arm a license fee for the original IP and pay royalties for each wafer or chip produced.

In addition to processor IP, the company also provides a range of tools, physics, and system IP to optimize system-on-chip design.

Arm first emerged in the semiconductor innovation process and was once hailed by Dataquest as the world's number one intellectual property provider. In the early 1990s, Arm pioneered the public licensing concept for 32-bit RISC microprocessor wafer system (SoC) intellectual property rights.

Microprocessors using Arm technology span all kinds of electronic products, and Arm technology is ubiquitous in the fields of automotive electronics, consumer entertainment, imaging, industrial control, networking, storage security, and wireless.

The company's partner network includes the world's leading semiconductor companies and system companies, and its customers include Apple (AAPL.US), Amazon (AMZN.US), and Google (GOOG.US), as well as chip manufacturers that directly compete with Nvidia, such as Intel (INTC.US) and Qualcomm (QCOM.US).

SoftBank said that in the nine months up to December last year, Arm's revenue increased 40% year over year to $2 billion.

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