NVIDIA may drop $40 billion Arm acquisition amid global concern

The deal continues to face heavy scrutiny.

Image via NVIDIA

Almost two years after Nvidia announced its acquisition of Cambridge-based chip designer Arm from SoftBank Group Corp., the $40 billion buyout—now valued closer to $75 billion—appears to be falling through.

Nvidia is reportedly backing out of acquiring Arm, citing its expectation for the deal to fail, according to Bloomberg. If Nvidia pulls out of the acquisition, it will be forced to make good on a $2 billion fee paid to SoftBank and Arm. Backing the claims that Nvidia is looking for the exit door is SoftBank’s efforts to ready up an Arm initial public offering (IPO), Bloomberg reports.

News of Nvidia’s potential withdrawal comes after months of scrutiny from various governments, including the U.S. and the U.K. The U.K. is the latest to express concern over the potential dangers of the takeover by launching a national security probe led by the Competition and Markets Authority (CMA). This investigation follows the United States’ Federal Trade Commission (FTC) suing to block the $40 billion semiconductor deal. China may also take issue with the deal if it were to go through in other countries, according to Bloomberg.

Arm and Nvidia recently pled their case to the CMA in a detailed and thorough document in which the companies claimed the acquisition would bolster competition in the console space. Given these efforts to convince the U.K. of the deal’s legitimacy, Nvidia and SoftBank’s statements are no surprise since nothing is set in stone.

“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 spokesman Bob Sherbin.

SoftBank also appears publicly optimistic in its brief statement.

“We remain hopeful that the transaction will be approved,” a SoftBank representative said in reply to Bloomberg.

The deal between Nvidia and SoftBank is no longer valid after Sept. 13, 2022. If talks offer enough forward motion, the option to extend the agreement is there. Still, the deal needs approval from the European Union, U.S., and U.K. Even after gaining the approval of these entities, Arm and Nvidia will also have to face China, which seems like a long shot considering U.S. efforts to lock China out of TSMC chips.