Nvidia is reportedly preparing to give up on its $40 billion purchase of chip designer Arm, according to Bloomberg News. The deal has faced intense scrutiny from regulators and vocal opposition from rivals, forcing Nvidia to adjust its original timeline for the purchase.
Now, Bloomberg says Nvidia is telling partners it doesn’t expect the deal to go through at all, while Arm’s current owner SoftBank is reportedly “stepping up preparations” to take Arm public via an initial public offering — which could be an alternative way to profitably rid itself of the firm.
Both Nvidia and SoftBank remain publicly committed to the deal, and Bloomberg notes that no final decision has been made. But such rumors are not surprising given it’s long been clear that geopolitical headwinds have been blowing hard against the acquisition.
Arm’s business is prized for its neutrality — an acquisition could spoil that
Arm is perhaps the world’s most important designer of silicon chips, and has become particularly successful through a policy of neutrality — creating designs for many rival companies around the world. Despite promises from Nvidia, regulators worry that the acquisition would mean the end of this stance, and that Arm’s work would slowly shift to align with US-based Nvidia’s interests, stifling the development of rival tech.
It’s this basic dynamic that has prompted regulators in the UK, EU, and US to scrutinize the deal, with the United States’ Federal Trade Commission even suing to stop the acquisition altogether. It’ll be months before all these cases come to a conclusion, stretching out the already elongated acquisition, which is fast approaching two years from the initial announcement.
In addition to the worries of Western regulators, there’s also China to consider, where Nvidia expects tough scrutiny. It’s hard not to compare the deal to US chip designer Qualcomm’s proposed 2016 acquisition of NXP Semiconductors. That $44 billion deal was eventually abandoned in 2018 after Chinese regulators objected.
For now, though, Nvidia and SoftBank are publicly pushing the same line: we’re hopeful, and let’s just see what happens.
“We remain hopeful that the transaction will be approved,” a SoftBank spokesperson told Bloomberg News. A spokesperson for Nvidia told the publication: “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.”