Nvidia is preparing to abandon its $40 billion purchase of chip designer Arm, according to Bloomberg. The deal has come under a lot of criticism from regulators and rivals, prompting Nvidia to move the execution date forward.
Nvidia’s acquisition of Arm might not go through
Nvidia is now claiming that it does not anticipate the acquisition to go through, according to Bloomberg’s report, even though Arm’s present owner, SoftBank, is reportedly “stepping up preparations” to take Arm public via an IPO.
The deal is still in the works, Bloomberg reports that Nvidia and Arm officials are still arguing their case before regulators, and no definitive judgments have been taken. But such rumors are not surprising given there is a lot of opposition against the acquisition.
ARM has long been a major designer of silicon chips, and its success is due in large part to its commitment to neutrality — it creates designs for many rival businesses all over the world. Despite Nvidia’s assurances, regulators are concerned that the acquisition will result in Arm’s neutrality being abandoned, with work gradually shifting to align with Nvidia’s interests, stifling innovation.
The basic foundation of this dynamic is what has prompted authorities in the United Kingdom, European Union, and the United States to examine the deal. The United States’ Federal Trade Commission has even sued to prevent the acquisition, citing concerns about how it would affect competition. It will be months before all of these cases are resolved; the delay will extend.
Bob Sherbin from Nvidia told Bloomberg: “We continue to hold the views expressed in detail in our latest regulatory filings — that this transaction provides an opportunity to accelerate Arm and boost competition and innovation.”
There’s also China to consider, where Nvidia expects a tough time. It’s difficult not to compare the situation to Qualcomm’s proposed 2016 purchase of NXP Semiconductors, which was worth $44 billion at the time but was canceled in 2018 after regulatory concerns emerged in China.
A SoftBank spokesperson told Bloomberg: “We remain hopeful that the transaction will be approved.”
