What you need to know
- NVIDIA's deal to purchase chipmaker Arm is unlikely to be completed, according to a report.
- Sources told Bloomberg that NVIDIA has informed its partners that it doesn't expect the transaction to go through.
- Qualcomm, Microsoft, Intel, Amazon, and other tech giants have opposed the proposed transaction.
- Several government bodies, including the United States Federal Trade Commission, have also fought against NVIDIA's acquisition of Arm.
NVIDIA's $40 billion acquisition of Arm now seems unlikely to be completed. Multiple sources shared insight with Bloomberg that suggests Nvidia could abandon its fight to get the deal approved by regulators. Since the announcement of the purchase, NVIDIA has fought an uphill battle against governing bodies in multiple countries.
One source told Bloomberg that NVIDIA doesn't expect the transaction to be completed. Publicly, NVIDIA has maintained its stance that it is trying to get the deal to go through.
"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," said NVIDIA spokesperson Bob Sherbin to Bloomberg.
"We remain hopeful that the transaction will be approved," stated another NVIDIA spokesperson in a comment to Bloomberg.
The U.S. Federal Trade Commission (FTC) sued to prevent the purchase of Arm by NVIDIA. China's government has also complicated the deal. Even if the $40 billion acquisition got over those hurdles, it would need to clear regulatory bodies in the UK and European Union.
Additionally, tech giants have challenged NVIDIA's purchase of Arm. Microsoft, Qualcomm, Intel, and Amazon are part of a group that has pushed against the merger.
The primary concern among tech giants and governing bodies is that if NVIDIA acquires Arm, the resulting company will have too much control over the chip industry. Arm chips are used in a vast range of devices, and companies are concerned that they could lose access to Arm tech if NVIDIA is in charge of it.
NVIDIA argues that purchasing Arm would help, not hinder, customers and have minimal impact on rivals' ability to compete.
Softbank, the current owner of Arm, is reportedly preparing alternate plans in case the sale of Arm to NVIDIA falls through. Softbank is said to be gearing up an Arm initial public offering (IPO), according to a separate source that spoke with Bloomberg. Rumors of an Arm IPO have swirled since at least July 2021.
While the initial deal to acquire Arm expires on September 13, 2022, it will be automatically renewed if NVIDIA is still working on getting it approved. NVIDIA's initial timeline of the purchase was "approximately 18 months," which would translate (roughly) to March 2022.
If the deal falls through, Softbank and Arm will be able to keep $2 billion, which includes a $1.25 billion fee for the deal breaking down.
