Graphics chipmaker Nvidia may be ready to walk away from the $40 billion acquisition of Arm, as the deal has progressed slowly and continues to face industry and regulatory backlash.
Nvidia announced in September 2020 that it would buy Arm from SoftBank in a deal for $40 billion in cash and stock. It’s been more than a year since that announcement, and the deal looks like it might be headed for the dumpster.
The various obstacles that have arisen since the announcement of the deal have reportedly led both companies to change their stance on the deal. Since the announcement of the deal, Nvidia, Arm, and Softbank have faced increased scrutiny from multiple quarters.
Bloomberg says an anonymous source says Nvidia doesn’t believe the transaction will complete.
Another source claims SoftBank is working towards holding an initial public offering for Arm if the Nvidia acquisition falls through.
The United States Federal Trade Commission sued to block the deal in December 2021, saying it would stifle innovation and harm competition in the chip market.
In the UK, the government, citing national security concerns, told the country’s Competition and Markets Authority to investigate the takeover of Arm in April. A formal investigation began in November.
The deal could also have problems with government authorities in China, who are apparently intending to block the takeover if other countries grant approval.
Other tech firms have voiced opposition to the deal. Chipmaker Qualcomm announced its opposition to the deal in February 2021, as it expressed concern that Nvidia could end up becoming a gatekeeper for ARM’s technology. Arm licenses its chip designs to more than 500 companies, including Apple and Qualcomm is concerned that Nvidia could prevent rivals from using Arm designs.
Executives of Nvidia and Arm are still reportedly working to make the deal happen, and at least publicly, they remain committed to it.
An Nvidia spokesperson said the “transaction provides an opportunity to accelerate Arm and boost competition and innovation.” Meanwhile, SoftBank says “We remain hopeful that the transaction will be approved.”
Both parties face a time limit to make the deal happen, as the initial agreement is set to expire on September 13, which marks the two-year anniversary of the acquisition announcement.