Nvidia Disarmed: What’s Next After Aborted $66 Billion Acquisition of SoftBank-Owned Arm

Nvidia has called off its $66 billion acquisition of chip design firm Arm Holdings, ending an 18-month regulatory review process that had long been doomed because the deal drew opposition from many quarters of the semiconductor industry that depend on Arm’s technology.

But the megadeal’s demise, first reported by the Financial Times and confirmed Tuesday by Nvidia and Arm owner SoftBank Group, raises thorny questions regarding how some of the key players will go forward. Namely, how will Arm generate enough cash as a stand-alone company to keep pace with rivals like Intel and counter the growing interest of its customers in open-source technologies it doesn’t develop?

It’s also unclear where SoftBank, which has been trying to sell off wholly owned subsidiaries as it transitions to an investment conglomerate, will find an exit for Arm that is as lucrative as Nvidia’s cash and shares, which despite a recent drop are still up more than 70% over the past year. SoftBank now plans to spin out Arm in an initial public offering, but given Arm’s finances, it may be difficult for SoftBank to recoup the $31 billion it paid for the company in 2016, according to people close to the failed deal.