Nvidia Arm

Nvidia has announced they are terminating the deal to acquire Arm Limited from the SoftBank Group.  The $40 billion deal faced significant regulatory challenges.  Arm is now looking at potentially spinning off from SoftBank in an IPO.

Analysis

The acquisition of Arm was announced in late 2020.  However, in recent weeks there were indications that Nvidia was looking to abandon the deal after the U.S. FTC, along with regulators in the U.K. and EU, were suing to block the merger.

Arm is a U.K.-based semiconductor design company that creates chip designs for Nvidia, as well as its competitors.  As Nvidia looks to expand beyond its core GPU business into data centers and CPUs it is not a huge surprise that the deal faced opposition.

Nvidia will continue to work with Arm as a licensee.  Nvidia stock has soared in the past year where it is above the combined market value of competitors Intel and AMD (in the video game market the value is above Sony and Nintendo combined).  It will be interesting to see if the end of this deal will have any impact on that valuation. 

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