Nvidia to Abandon Arm Acquisition

NVIDIA's ARM Acquisition Faces Regulatory Hurdles

Reports indicate that NVIDIA is making minimal headway in securing regulatory clearance for its proposed $40 billion acquisition of ARM. Sources at Bloomberg suggest the company is now privately preparing to terminate the deal.

Simultaneously, SoftBank, ARM’s current owner, is reportedly progressing with plans for an initial public offering (IPO) of ARM as a contingency to the failed acquisition, according to an individual with knowledge of the situation.

Deal Announcement and Initial Optimism

NVIDIA initially unveiled the acquisition in September 2020. CEO Jensen Huang stated at the time that the merger would establish a company exceptionally well-suited for the era of AI.

ARM’s core designs are extensively licensed by major technology firms, including Apple, Qualcomm, Microsoft, Samsung, Intel, and Amazon, and are almost universally found in smartphones and various mobile devices.

Growing Opposition and Regulatory Scrutiny

Shortly following the announcement, opposition to the deal began to emerge. The United Kingdom, where ARM is headquartered, initiated an antitrust investigation in January 2021.

A further national security review was launched in November of the same year. In the United States, the FTC recently filed a lawsuit to block the purchase, citing concerns about potential suppression of competition within sectors like data centers and automotive manufacturing.

Bloomberg sources also indicate that China may block the transaction if other regulatory bodies do not grant approval.

Concerns from Industry Players

It is reported that companies such as Intel, Amazon, and Microsoft have provided regulators with information that could lead to the deal's collapse.

These companies have previously argued that NVIDIA's position as an ARM client creates a conflict of interest, hindering ARM’s independence. This could potentially allow NVIDIA to operate as both a supplier and a competitor to other ARM licensees.

Official Statements and Ongoing Efforts

Despite the significant challenges, both NVIDIA and SoftBank publicly maintain their commitment to pursuing the transaction.

NVIDIA spokesman Bob Sherbin stated to Bloomberg, “We continue to hold the views… that this transaction provides an opportunity to accelerate ARM and boost competition and innovation.” A SoftBank spokesperson echoed this sentiment, expressing hope for eventual approval.

SoftBank Considers Alternative Strategies

However, internal factions within SoftBank are reportedly advocating for an ARM IPO, particularly given the current strength of the semiconductor industry.

Other parties within the company favor continuing to pursue the NVIDIA acquisition, as NVIDIA’s stock price has nearly doubled since the deal was announced, effectively increasing the overall transaction value.