SoftBank now plans to proceed with an initial public offering of Arm, in lieu of the deal, according to the people, who asked not to be identified because the move isn’t yet public. The IPO is expected to happen in the fiscal year ending March 2023.

Arm Chief Executive Officer Simon Segars has resigned, handing the job to President Rene Haas, according to the people. The move wasn’t related to the demise of the deal, one of the people said. Segars was one of Arm’s first employees and worked his way up through the ranks to become CEO in 2013. He continued to lead the company after it was acquired by SoftBank in 2016.

The Financial Times reported earlier that the transaction collapsed on Monday. Last month, Bloomberg reported that Nvidia was preparing to wind down the deal. SoftBank and Arm are entitled to keep $2 billion that Nvidia paid at signing, including a $1.25 billion breakup fee.

Nvidia, Arm and SoftBank representatives declined to comment.

Nvidia announced the acquisition in September 2020, aiming to take control of chip technology that’s used in everything from phones to factory equipment. But the $40 billion transaction faced opposition from the start. Arm’s own customers scorned the idea, and regulators vowed to give it close scrutiny.

The purchase was dealt its most severe blow when the U.S. Federal Trade Commission sued to block it in December, arguing that Nvidia would gain too much control over chip designs used by the world’s biggest technology companies. The agreement also needed approval in the European Union and China, as well as the U.K., where Arm is based — none of which appeared poised to clear the transaction. 

Arm’s value has always been its neutrality, something that SoftBank, which doesn’t compete with any of the technology’s customers, was able to maintain. When Nvidia announced the deal, concerns grew that either its value would be destroyed by the change in ownership or opposition would scuttle its chances of getting signoff from governments around the world.

Bloomberg reported on Jan. 25 that Nvidia was quietly preparing to abandon the purchase. The Santa Clara, California-based company told partners that it didn’t expect the transaction to close. Still, some factions within the chipmaker had hoped to press ahead with a regulatory fight to win approval.

With the deal dead, SoftBank is now falling back on an earlier plan: an IPO. The route is unlikely to offer the same payday as the takeover offer, which had increased in value alongside the price of Nvidia’s shares. A run-up last year had added tens of billions of dollars to the transaction’s price tag.

SoftBank shares were little changed in Tokyo trading on Tuesday morning ahead of the company’s earnings report.

Arm’s designs and technology, which it licenses to companies that make their own chips, are the foundation of almost all of the world’s smartphones. They’re also making headway in personal computing, cars and data centers. Arm’s customers include Apple Inc., Amazon.com Inc.’s AWS and Alphabet Inc.’s Google, along with chipmakers that compete directly with Nvidia, such as Intel Corp. and Qualcomm Inc.

The troubled Arm deal hasn’t put much of a pall on Nvidia’s stock. Even after a recent tumble, it’s up more than 80% in the past 12 months. The company, which built its reputation making 3D graphics processors for video games, has been expanding into servers and other markets, helping turn it into the biggest U.S. chip company by market value. 

The failed deal also put a spotlight on tension between China and the U.S. over chips. The Asian nation is the biggest market for semiconductors, while America is home to the majority of the world’s chip companies by revenue. That gave the two countries divergent interests in examining the Arm acquisition. In the middle, the U.K. was faced with the possibility of its most famous technology asset shifting to U.S. control.

In the meantime, Arm has raised its ambitions. Over the past half-decade, the company has increased its workforce and investment in new technology, aiming to add capabilities that will let it make further inroads.

Nvidia had promised to keep Arm’s neutrality and pour in money. With that prospect gone, Arm faces life back in the public markets, where its spending and priorities may face fresh challenges.