TOKYO — SoftBank’s planned sale of British semiconductor and software design firm Arm to U.S. chipmaker Nvidia fell through, but the Japanese tech investor immediately turned bullish as it went public.
SoftBank Group Corp. announced on Tuesday that it plans an initial public offering of Arm after the planned sale to Nvidia fell through due to regulatory issues. He said the IPO would come in the fiscal year ending March 2023.
CEO Masayoshi Son admitted he was disappointed, but wasted no time in moving on to an aggressive sales pitch for Arm in preparation for the likely U.S. IPO. on the Nasdaq stock exchange.
“Arm is back. Instead of being back, he’s really going to grow explosively,” Son told reporters.
He said a “golden age” was coming because of Arm’s “architecture” or semiconductor technology, already widely used in cellphones and adapted by internet giants like Amazon. Son said even greater growth will come as the world shifts to electric vehicles because Arm products are energy efficient.
Arm’s earlier faltering results were simply due to a heavy investment in hiring the engineers needed to sustain such innovations, Son said.
Son said he was bringing in new management to give Arm a fresh start, with semiconductor industry veteran Rene Haas as chief executive, replacing Simon Segars.
“With the uncertainty of the past few months behind us, we are emboldened with renewed energy to shift to a growth strategy and change lives around the world again,” Haas said.
Arm’s semiconductor design is widely used in smartphones, tablets and TVs
Arm, which SoftBank acquired in 2016, is a leader in artificial intelligence, IoT, cloud, metaverse and autonomous driving, with sales and profits growing in recent years. Its semiconductor design is widely licensed and used in virtually all smartphones, the majority of tablets, and digital televisions.
The company’s business is centered on chip design and licensing intellectual property to customers, rather than chip manufacturing, for which it relies on partners.
Nvidia also confirmed that the merger is no longer in progress, although it still has its 20-year licensing agreement with Arm.
“Arm is at the center of important computing momentum. Although we are not one company, we will partner closely with Arm,” said Jensen Huang, Founder and CEO of Nvidia.
FTC sued to block Nvidia’s $40 billion deal to buy Arm
In December, the Federal Trade Commission filed a lawsuit to block Nvidia’s $40 billion acquisition of Arm, saying the deal would give one of the biggest chip companies control of the technology. computing and designs that rival companies rely on to develop their own competing chips.
The FTC said the combined venture could stifle innovative next-generation technologies, including those used to power data centers and driver assistance systems in cars.
The UK government’s Competition and Markets Authority, which had been investigating whether the deal could harm competition, said it was dropping the inquiry. European Union regulators had also investigated.
Geoff Blaber, managing director of CCS Insight, said the opposition to the sale came as no surprise as many people wanted Arm to remain independent.
“It also disrupted Arm and its ecosystem. An IPO is a much better option for the Arm ecosystem, but it’s unlikely to provide Softbank with a comparable return,” he said.
Besides Arm, SoftBank has stakes in various technology companies, including mobile operator SoftBank, web services provider Yahoo, Chinese e-commerce giant Alibaba and car rental company Didi. SoftBank also participates in funds that include other global investors called Vision Funds, which focuses on artificial intelligence companies.
Consequently, its financial results tend to be complex and varied. SoftBank bought and then sold stakes in office-sharing company WeWork, robotics company Boston Dynamics, mobility services provider Uber and mobile phone operator Sprint, all US companies.
SoftBank’s profit fell 98% in the quarter through December as the value of its sprawling investments declined.
Net profit for the fiscal third quarter totaled 29 billion yen ($252 million), up from 1.17 trillion yen a year earlier, the company said. Quarterly sales rose slightly to 1.6 trillion yen ($13.9 billion) from 1.5 trillion yen.
Son, who founded SoftBank, is one of Japan’s most famous business successes. He has repeatedly emphasized that his decisions have proven to be sound in the long run. A graduate of the University of California at Berkeley, he realized the potential of the internet decades ago.