Following the news that Nvidia is likely to walk away from its acquisition of Arm;

Dr Lil Read, Analyst in the Thematic Research Team at GlobalData, a leading data and analytics company, offers her view:

“Nvidia no longer needs Arm. It has a new, shinier toy: the metaverse. The Nvidia-Arm deal was announced when the metaverse was barely a twinkle in the eyes of a crypto bro. Now, Nvidia’s path has changed as its Omniverse platform signals its future as the overlord of the metaverse. Though Arm is a highly consequential global company, it faces existential threat from RISC-V in the next five years, especially in the semiconductor-hungry powerhouse of China. Thus, Nvidia has taken a quiet, graceful exit.

“Although an IPO – in the UK or the US – has been mooted, a private equity consortium may be a more attractive way out of the maze for Arm and Softbank. It’s likely that the UK government, particularly Chancellor Rishi Sunak, would likely welcome a UK float, giving the LSE its own home-grown tech stock to parade to the Nasdaq.”

Mike Orme, Consultant Analyst in the Thematic Research Team at GlobalData, offers his view:

“Intel, TSMC, and Samsung’s investment in 2012 helped ASML fund the development of its ultra-violet chip (EUV) printing technology, providing a potential template for Arm in the cases of both an IPO or, perhaps more likely, a private equity (PE) deal.

“The three invested $3.2 billion between them to acquire 23% of the company, with Intel putting in the lion’s share for 15% of ASML. A similar kind of pre-competitive collaborative strategic investment by Arm’s leading customers (such as Apple, Qualcomm, and TSMC) could help it cover research and development (R&D) costs in the likely event of the Nvidia deal falling. Given the strategic importance of Arm to Apple, Qualcomm, and TSMC’s  futures, they may well reach into their pockets and support an IPO or a private equity deal.

“Though a flotation would take six months to organise, there would be no shortage of investors willing to take strategic stakes – including those that opposed the original deal. It’s not a big stretch of the imagination that Apple, Qualcomm, Broadcom – even TSMC – would take strategic stakes in a floated Arm. Softbank would probably retain a minority stake in the event of a float given the sunk financial and emotional costs it has already endured. It’s clear that today’s bumpy regulatory landscape would see off the chances of any separate single takeover bid for Arm. Arm will not fall over without being financially propped up by Nvidia, but it will have to narrow focus and curtail some R&D.

David Bicknell, Principal Analyst in the Thematic Research Team at GlobalData, offers his view:

“The days of long, drawn out mergers and acquisitions (M&A) bids are over. Amid a harsher regulatory regime ready to scrutinise Big Tech deals, only the largest players have the ambition and patience to stare down the regulators. Regulatory uncertainty means big deals by Big Tech will be under the microscope in all corners of the world.

“Nvidia’s intense interest in the metaverse has also shown that new tech developments may well call time on long-running bids. The UK government’s National Security and Investment Act will further box in any would-be new Arm bidders.”