Arm Ltd CEO Simon Segars remains sanguine about the regulatory process governing his company’s proposed $40 billion sale to Nvidia. “It’s been a year, and we’re still in the regulatory process,” Segars told the audience of the Wall Street Journal’s Tech Live. “But we’re really confident that the regulators will see the benefits of the deal.” There are increasing signs that dealmakers are bullish on semiconductor investment, whether the antitrust climate improves or not.

The deal announcements speak volumes themselves. After years of activity confined to the middle market, sector megamergers and listings are back. Chipmaker GlobalFoundries filed for an IPO with the SEC on Oct. 4, following Intel’s reported $30 billion takeover approach over the summer.

Arm was also reportedly considering an IPO, should the Nvidia bid fall through, but Segars denied the speculation in a July blog post. “We contemplated an IPO but determined that the pressure to deliver short-term revenue growth and profitability would suffocate our ability to invest, expand, move fast and innovate,” Segars wrote.

In the same post, some of Segars’ comments could be interpreted as opening the door to a stake sale, if the Nvidia deal doesn’t close and going public is off the table. “Under our current owner, SoftBank, we have invested heavily in new chip technologies which allowed us to enter new markets such as 5G networks and cloud computing,” Segars wrote. “But that work was only a beginning and won’t be enough for us to fulfill our ambitions. To lead in AI, Arm will need to expand our scope, expand our business and invest in new technologies.” Nevertheless, Segars made it clear he thinks the Nvidia deal is the best path forward: “Combining with Nvidia will give us the scale and the resources necessary to address the complexity of next-generation technology that no other path can.” 

Let’s also look at investor commentary on the chip sector. Remember, only weeks ago Cota Capital’s PV Bóccasam predicted the sector could see an increase in investment as the need for domestic supply chains gains prominence. It’s easy to see the logic: geopolitical tensions with China raise the stakes of the world’s ongoing semiconductor shortage as suppliers grapple with components and manufacturing operations sourced abroad. That gives dealmakers a short-term incentive to invest in domestic semiconductor adjacent technology.

As for Arm, at the WSJ conference this week, Segars spoke much more favorably about its prospects as a standalone should regulators block the deal, at least relative to his earlier IPO comments. “The future of tech is incredibly bright,” he said. “The future involves more computing rather than less, but we’re going to see this deal through because we see it as highly beneficial.”

Brandon Zero