Nvidia may back down on its efforts to acquire chipmaker Arm after facing numerous hurdles from regulators, according to a new report.
TO Bloomberg The report cites Nvidia sources who are aware of the company’s plans to abandon the $40 billion acquisition. Nvidia announced plans to buy Arm from current owners SoftBank in September 2020, expecting the deal to close within 18 months. As the deadline approaches, Nvidia doesn’t appear to be close to closing the deal thanks to strong opposition from the FTC. The report says that Nvidia has already started notifying its partners that the deal will not go through.
The FTC announced last year that it was suing Nvidia over the acquisition, citing anti-competitive concerns. Arm supplies chip designs to many companies, including competitors Nvidia, AMD, and Intel. Its chip designs are also used in large server installations deployed by Microsoft and Amazon, each of which may see Nvidia as a competitor as it accelerates machine learning efforts for industrial use. This makes the acquisition difficult for Nvidia, which is trying to argue that it will not interfere with the competition.
Even as Nvidia clears the hurdle of the FTC lawsuit, it still faces intense scrutiny in the UK and the EU, where antitrust organizations have already signaled plans to further investigate the deal if it goes that far. The Chinese government has also signaled its opposition to the deal, saying it would make Nvidia a dangerous competitor for its own exported semiconductor business.
Although Nvidia and SoftBank still publicly support the deal and are confident it will go through, SoftBank could prepare an IPO for Arm if it fails. SoftBank will also retain the $2 billion signing bonus and an additional $1.5 billion severance fee.
Nvidia has yet to confirm or deny the report. Microsoft received similar accusations of antitrust behavior last week after it confirmed its intention to acquire Activision Blizzard within the next 18 months, but several lawyers suggested an investigation might not be necessary.
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