Nvidia falls flat as Arm deal flounders

This article is an on-site version of our #techFT newsletter. Sign up here to receive the full newsletter straight to your inbox every weekday

Nvidia shares fell 10% on Monday before ending the day flat on the Nasdaq roller coaster, but are down more than 5% today on company-specific news that the chip designer Arm’s deal could be dead.

Bloomberg reports that Nvidia is “quietly preparing to give up
its purchase of Arm Ltd. to SoftBank Group Corp. after making little or no progress in gaining approval”.

Regulators in the US, UK, Europe and China are expected to give the go-ahead, but there has been growing opposition to the cash and share deal initially valued at $40 billion in September 2020.

Last month, the U.S. Federal Trade Commission filed a lawsuit to block the deal to “prevent a chip conglomerate from choking off the innovation pipeline for next-generation technologies.” The UK launched an investigation into the deal on national security grounds in November after its Competition and Markets Authority expressed “serious competition concerns” over the summer. The European Union launched an investigation in October saying Nvidia ownership “could lead to restricted or degraded access to Arm’s IP.”

There were major doubts from the start that this deal would ever be done. Arm is the Switzerland of the semiconductor world, providing the core chip designs that everyone in the industry depends on to use and adapt. The prospect of a single chip company controlling it raised a massive red flag with regulators and created a firestorm of criticism from Nvidia’s rivals.

Failing the deal would hurt both Nvidia and Arm owner SoftBank. Nvidia would lose its “deposit” of a $1.25 billion severance fee and $750 million license consideration paid to SoftBank, while the Japanese company would have missed the stock price in full rise of Nvidia doubling the value of the transaction to more than 80 billion dollars.

SoftBank’s plan B is expected to be an IPO for Arm. This could still represent a good return on his investment. It paid £24 billion ($32 billion) for Arm in 2016, but the company’s value has been bolstered by semi-shortages over the past two years. They underscored the critical importance to nations and multiple industries of chips, and those who design their beating hearts.

The Internet of (five) things

1. Google changes course on cookies
Google is ditching the Floc technology it was building to replace advertising cookies and will instead use a method of tracking user interests known as Topics, to allay industry concerns. On Tuesday, Google acknowledged that Floc may not be doing enough to protect the identity of individuals online and not making it easy enough for people to understand or control how their data is used.

2. Technical reset is uneven
The big rout in tech stocks is proving uneven, says Lex. Cryptocurrency platform Coinbase is down 45%, following the trajectory of bitcoin’s decline, but tech giants such as Alphabet have lost around a tenth of their market value. The latter is a safer bet with rising free cash flow and strong net cash.

3. Department of Justice Antitrust Warning
Jonathan Kanter, in one of his first speeches as head of the US Department of Justice’s Antitrust Division, warned that he would seek to block more anti-competitive deals. The FT View is that Microsoft has taken on a juicy challenge with its deal to buy Activision Blizzard. Things get tough for Big Tech on Capitol Hill, too.

Daily newsletter

#techFT brings you news, commentary and analysis on the big companies, technologies and issues shaping this industry’s fastest movement from specialists based around the world. Click here to get #techFT in your inbox.

4. China is launching a campaign to “purify” the web
China has launched a month-long campaign to clean up online content during next week’s Lunar New Year festival, as part of its latest push to reshape behavior on the internet. China’s Cyberspace Administration, the country’s top internet regulator, has ordered officials to sweep up ‘illegal content and information’ and target celebrity fan groups, online abuse, money worship , influential kids and media site homepages.

5. Muzmatch by naming tiff with Match
Over the past year, the Muslim marriage app, with 5 million users worldwide, has fought a future-threatening lawsuit brought by dating giant Match Group. which owns much larger services including Match.com, OkCupid, Tinder, and Hinge. The UK Intellectual Property Court is expected to rule on the matter in the coming weeks.

Tech Tools — Music From Scratch with Mictic

Mictic wristbands allow you to rock out, without having to set up loud drums and a guitar in your living room, writes Cristina Criddle. The Swiss start-up has created a pair of wearable devices that, with an app, let you play different invisible instruments while locking yourself to a backing track, using the movement of your hands to change notes and speeds.

The wristbands use Bluetooth to connect to your smartphone and have sensors to detect movement and gestures. Depending on the instrument, users will have different movements to play with. Each option comes with a short video tutorial, but it takes some practice to master. Currently, users can choose from Hip Hop, Trap, Latin, and EDM genres for backing music, and choose to play guitar, drums, cello, piano, or theremin.
The product launched in November and attracted investment from musician Moby. He hopes to add new genres, tracks and instruments to his app this year.

#techAsia — Your guide to the billions being made and lost in the world of Asia Tech. register here

#fintechFT – Breaking news on the tech industry’s most pressing issues. register here

Comments are closed.