United States semiconductor manufacturer NVIDIA and Japanese multinational conglomerate holding firm SoftBank Group Corp announced Tuesday the termination of the previously announced transaction whereby NVIDIA would acquire Arm Limited from Softbank.

Both parties said in a statement that they have agreed to terminate the agreement because of significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties.

Arm will now start preparations for a public offering.

“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 Chief Executive Officer 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, artificial intelligence (AI) and robotics. I expect Arm to be the most important CPU architecture of the next decade,” he added.

Softbank also announced on Tuesday that in coordination with Arm, it will start preparations for a public offering of Arm within the fiscal year ending March 31, 2023.

Softbank believes Arm’s technology and intellectual property will continue to be at the center of mobile computing and the development of artificial intelligence (AI).

“Arm is becoming a center of innovation not only in the mobile phone revolution, but also in cloud computing, automotive, the Internet of Things (IoT) and the metaverse, and has entered its second growth phase,” said Masayoshi Son, Representative Director, Corporate Officer, Chairman and Chief Executive Officer of SoftBank.

“We will take this opportunity and start preparing to take Arm public, and to make even further progress,” he said.

NVIDIA and Softbank had announced that they had entered into a definitive agreement, under which NVIDIA would acquire Arm from SoftBank, on September 13, 2020. In accordance with the terms of the agreement, Softbank will retain the $1.25 billion prepaid by NVIDIA, which will be recorded as profit in the fourth quarter, and NVIDIA will retain its 20-year Arm license.

Arm is a global leader in the development of semiconductor technology and is central to the pervasive computing that is shaping today’s connected world. Arm’s processor technology is the world’s most widely licensed and deployed semiconductor design of its kind and is used in virtually all smartphones, the majority of tablets and digital televisions, and a significant proportion of all chips with embedded processors.

Since being acquired by Softbank in 2016, Arm has increased investment in research and development, expanding its product portfolio and addressable markets, and is now gaining share in fast growing markets such as AI, IoT, cloud, autonomous driving, and the metaverse. This has resulted in Arm’s revenues and profits growing strongly over the past two years and provides a foundation for future growth.

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