Arm is set to return to public markets after NVIDIA’s blockbuster $66 billion buyout attempt failed amid blowback from both regulators and rivals in the semiconductor world. (The two blamed “significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties” for the deal’s collapse.) Owner SoftBank will take Arm public in 2023, the two said in a statement on February 7.
Arm CEO Simon Segars stepped down after 30 years at the company in the wake of the deal’s collapse. SoftBank said Rene Haas, president of the Arm IP Products Group since 2017, would take over as CEO.
“Rene is the right leader to accelerate Arm’s growth as the company starts making preparations to re-enter the public markets,” said SoftBank CEO Masayoshi Son. (Japan’s SoftBank based UK-based Arm in 2016.)
In November 2021 as The Stack first reported at the time, the UK’s Competition and Markets Authority (CMA) revealed that NVIDIA had promised to preserve Arm’s open licensing regime for just five years, saying in a blistering decision that “a five-year commitment falls manifestly short of the time period required to remedy the concerns identified… which are lasting in nature, and pertain to long development cycles.”
NVIDIA had made six key behavioural commitments to assuage competition concerns. These were roundly rejected by the CMA which warned — among other concerns it flagged — that NVIDIA’s commitments would not “prevent the overall strategic direction and focus of R&D research from being directed towards NVIDIA’s needs” nor “prevent technical or other de facto restrictions on interoperability being introduced.”
Arm licenses processor designs to semiconductor companies that incorporate the technology into their computer chips. Licensees pay an up-front fee to gain access to its technology, and a royalty on every chip that uses one of its technology designs. Typically, the royalty is based on the selling price of the chip. Each Arm design can be reused in a variety of chip families to address multiple markets. Each new chip family generates a new stream of royalties. An Arm design may be used in many different chips and may ship for more than 25 years.
“Arm has a bright future, and we’ll continue to support them as a proud licensee for decades to come,” said Jensen Huang, founder and CEO of NVIDIA. “Arm is at the center 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.”
“Arm is becoming a center 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,” said SoftBank’s Masayoshi Son, adding: “We will take this opportunity and start preparing to take Arm public.”
Arm’s 2021 annual report reveals that technology royalty revenue grew 16.7% year-on-year, with the company signing some 160 new royalty deals during the year. Arm partners have shipped over 200 billion chips over the years, outgoing CEO Segars revealed in October 2021, with Arm-based chips gaining increased traction across both cloud hyperscalers like AWS and powering new Apple devices in recent years.