Nvidia prepares to abandon Arm acquisition
Nvidia concerned about getting approvals past the regulatory hurdles the deal has faced
Nvidia is allegedly preparing to abandon the $40 billion (£30 billion) acquisition it had planned for British semiconductor company Arm, after making struggling to gain regulatory approval.
Citing 'people familiar with the matter', Bloomberg says the American chipmaker has told partners it does not expect the deal to close.
The deal has faced regulatory hurdles in many countries, including the United States, where the Federal Trade Commission (FTC) filed a lawsuit last month to block it over antitrust concerns.
One source told Bloomberg that Arm's current owner, Japanese investment giant SoftBank, has begun to prepare for an initial public offering (IPO) of the company as an alternative to the Nvidia acquisition.
However, no final decision on the deal has been made as both companies continue to plead their case to regulators.
In a statement to Bloomberg, Nvidia spokesman Bob Sherbin said the company still believes that the transaction will provide "an opportunity to accelerate Arm" and boost competition and innovation in the market.
A SoftBank spokesperson said they remain hopeful that the transaction will be able to get regulatory approval.
Earlier this month, Nvidia discussed the benefits of the Arm transaction in a filing with the US Securities and Exchange Commission, stating that it was originally approached by SoftBank about a possible deal.
The deal is under heavy scrutiny because the world's largest tech firms rely on Arm's chip designs, which are used in everything from mobile phones to cars to factory equipment.
Companies including Apple, Samsung and Qualcomm use Arm technology to produce their own processors. Nearly every smartphone in the world, for example, uses Arm's chip designs.
Nvidia, which is also an Arm customer, has said that fears it would give itself preferential treatment following the completion of the deal are baseless.
The US chip firm has long promised that Arm would operate as a separate division within the company.
Last month, the FTC filed a lawsuit to block Nvidia's acquisition of Arm, arguing that the proposed merger would give Nvidia too much control over the supply of chips and designs used by its competitors.
'The proposed merger would give Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice, harming the millions of Americans who benefit from Arm-based products,' the FTC said in a statement.
The deal is also under scrutiny in the UK and the EU, where regulators are concerned about the acquisition pushing up prices and limiting choice and innovation for customers.
The UK government ordered an in-depth phase 2 probe in November over both antitrust and national security concerns. The inquiry will take about six months, following which the government could approve the deal, block it, or allow it to pass with certain conditions.
Nvidia said at the time that it would work with the British government to address its concerns. The company added that a phase 2 probe would allow it to show how the deal would help strengthen Arm and encourage competition.
The European Commission has also launched its own detailed investigation into the deal.
Last year, Arm CEO Simon Segars hinted that the firm was considering an IPO, although the proposed move was under the shadow of doubt due to the fact that it might adversely impact Arm's ability to expand.