The collapse of US chipmaker Nvidia’s plan to acquire British chip design company Arm from Japan’s SoftBank in a deal worth $66bn signals the deep shift in the way national authorities are assessing foreign investment deals in sensitive sectors. 

Michele Davis, a London-based partner at law firm Freshfields, told fDi that the UK’s investigation of the US chipmaker’s plan to buy Arm shows how FDI regimes have moved beyond their focus on hostile actors.


“There’s some domestic advantage that is effectively being given up if you allow a crown jewel to be sold to an external investor,” she said. “It doesn’t matter if you’re Chinese or from the US, it’s the same impact.” 

On February 7, Nvidia and Softbank published a statement saying that “the parties agreed to terminate the agreement because of significant regulatory challenges preventing the consummation of the transaction”. 

The collapse brought an immediate change in the management of Arm, which has replaced its CEO Simon Segars with Rene Haas, head of the company’s intellectual property unit.

Nvidia’s plan to buy Arm has been under scrutiny by prominent voices such as Arm’s co-founder Hermann Hauser, as well as multiple regulators in the UK, US and Europe, since it was announced in September 2020.

Mr Hauser previously told fDi that the takeover “threatens Arm’s business model in the most fundamental way” as Nvidia is one among hundreds of other companies that licence the Cambridge-based company’s chip designs. 

Regulators in multiple countries had been concerned that the deal would harm the competitiveness of Nvidia’s rivals, such as Qualcomm, by restricting access to Arm’s intellectual property. 

The Cambridge-based company’s chip designs are used in consumer electronics like mobile phones and cloud computing, and underpin innovations in areas such as the Internet of Things.

The politically charged reaction to what would have been the world’s largest ever chip deal comes as governments worldwide push to develop their technological sovereignty. 

The Nvidia–Arm deal was the first ever transaction to enter a phase-two national security review under the UK’s foreign direct investment control regime. The UK’s Competition and Markets Authority, which was due to further scrutinise the deal this month, has cancelled its investigation into the merger.

SoftBank Group, which acquired Arm for $32bn in 2016, now plans to list the chip designer in New York before the end of its next fiscal year in March 2023.

Masayoshi Son, the chairman and CEO of SoftBank Group, said in a statement that Arm has “entered its second growth phase” and the company will use this opportunity to start preparing to take Arm public. The Financial Times reported that UK ministers have signalled a desire for Arm to list in London, but SoftBank intends to list Arm’s initial public offering in the US, which has much higher tech valuations.