How Chip Neutrality Scuppered Nvidia Deal to Buy Arm: QuickTake

One of the most influential businesses in the tech industry is unknown to most consumers: Arm Ltd. The UK-based company designs key parts of the chips that power almost every smartphone on the planet. Its strategic importance is so great that when owner SoftBank Group Corp. decided in 2020 to sell the company to US chipmaker Nvidia Corp., it sparked an outcry from Arm’s customers that eventually killed the $40 billion deal. SoftBank’s Plan B is to sell Arm shares in New York in what could be the chip industry’s biggest-ever initial public offering.

Arm doesn’t own factories or produce its own chips. The company designs core semiconductor components and licenses the blueprints to other firms in exchange for a fee based on how many are produced. The arrangement brings in more than $700 million in quarterly revenue, making Arm one of the UK’s largest tech businesses. That’s still a fraction of the sales that tech giants like Nvidia and Intel Corp. generate, and Arm has a relatively small workforce of about 6,000. Yet few companies reach so far across the tech ecosystem: More than 240 billion chips have been made with Arm technology. The company estimates that, soon, 100% of the world’s digital data will be processed by that technology at some point during its life cycle.