Nvidia is reportedly preparing to abandon its $40 billion Arm acquisition

Back in 2020, Nvidia announced that it is acquiring UK chipmaker Arm for a whopping $40 billion. At that time, Arm belonged to SoftBank, which purchased the company for over $32 billion in 2016. The deal was expected to be completed by September 2021, but that date went by without any announcement from Nvidia, and it now appears that the firm has abandoned its plans to buy the UK chipset designer.

A report from Bloomberg claims that Nvidia has quietly begun informing partners that it does not plan to complete the deal. Meanwhile, an unidentified source from SoftBank also claims that the Japanese firm is considering an initial public offering (IPO) to rid itself of Arm.

The Nvidia-Arm deal was supposed to be the biggest semiconductor acquisition when it was announced back in September 2020. However, it has constantly faced an uphill battle since then.

In April 2021, the UK government began looking into the transaction in order to understand the long-term national consequences of such an acquisition and antitrust concerns. Then in August, it was revealed that the UK government could halt the deal altogether due to national security concerns. Similarly, last month, the U.S. Federal Trade Commission (FTC) filed a lawsuit to prevent the deal from going through, citing unfair advantage for Nvidia because the acquisition would give the firm immense control over the technology that is used by the industry to design chipset for devices ranging from laptops to smartphones, and even cars. The purchases faces similar regulatory hurdles in China too.

Citing unnamed sources, Bloomberg claims that a group consisting of Microsoft, Google, Qualcomm, Intel, and Amazon have also been working with regulators to halt the deal. Their purported reasoning is that the acquisition will make it difficult for Arm to remain independent and continue providing services to everyone as-is, especially considering that Nvidia is an Arm customer too.

Naturally, the deal has caused internal rifts at both Nvidia and SoftBank as well. Some claim that the FTC trial should be used to solidify the strengths of the transaction while others think that Nvidia should just back off. In the same vein, at SoftBank, there are those who want to play the long game versus those who want an Arm IPO as soon as possible.

Publicly, both Nvidia and SoftBank have stated that they are hopeful that the transaction will go through, but the latest report shows that there are major concerns regarding the acquisition internally. It remains to be seen how the matter will play out in the long run.

Source: Bloomberg