Biggest chip makers deal in history collapses

SoftBank’s record sale of an award-winning chip designer to Nvidia has been officially called off.

With an initial value of $40 billion, the US chipmaker’s takeover of British design firm ARM would have been the biggest semiconductor deal on record. But regulators around the world have long raised concerns about the deal, which ultimately led to its collapse on Tuesday.

In a statement, SoftBank cited “significant regulatory challenges” that prevented the deal from closing. The Japanese bank said it would instead prepare ARM for a public offering in the fiscal year ending March 2023.

Under the terms of the deal, SoftBank had already received a deposit of $1.25 billion during the signing. That payment was non-refundable and “will be recognized as profit” in the Japanese conglomerate’s earnings for the quarter ending March this year, he said.

ARM designs chips used by Apple and other major smartphone manufacturers. The company is based in Cambridge and is known as one of Britain’s most successful technology companies.

The transaction was first announced in 2020, four years after SoftBank bought ARM for $32 billion, marking the largest foreign acquisition by a Japanese company at the time.

Originally, it was expected to close within 18 months, which would have happened by now. But it lost steam as it became the subject of global regulatory scrutiny, including from China and the UK.

Just days after the announcement, an op-ed in the Chinese state-run tabloid Global Times called the measure “disturbing”.

“If ARM were to fall into US hands, Chinese tech companies would certainly be placed at a great disadvantage in the market,” the editorial read.

In December, the US Federal Trade Commission filed a lawsuit to block the deal, saying it would stifle competition and give the combined company too much control over the technology and chip designs.

The European Commission also launched an investigation into the deal late last year. It would have to pass regulatory approvals from the UK, EU, US and China.

Had it passed, it would have been the semiconductor industry’s biggest-ever deal, surpassing Avago’s 2015 acquisition of Broadcom, according to Dealogic.

Speaking at an earnings call on Tuesday, SoftBank CEO Masayoshi Son remained optimistic about future plans for ARM.

While acknowledging that his company was now turning to a “plan B,” he said SoftBank originally hoped to take ARM public after acquiring it years ago.

“So this is the original plan again,” he said.

Still, the billionaire lashed out at those who opposed the deal, arguing that critics seemed “eager to block” a deal between “two totally different businesses”.

In the history of antitrust claims, “this could be the first case” involving claims about two of these “different companies,” he said, comparing Nvidia and ARM to car engine and tire makers.

“Why do they have to block this transaction?” he asked.

ARM also announced a new leader on Tuesday, saying longtime CEO Simon Segars would be replaced by executive Rene Haas.

In a statement, Son thanked Segars for his 30-year tenure with the company and said, “Rene is the right leader to accelerate ARM’s growth as the company begins to prepare to re-enter public markets.”

— Rishi Iyengar contributed to this story.