Nvidia is apparently preparing to withdraw from its proposed $40 billion deal to acquire Arm.
Nvidia entered advanced talks to acquire Arm in July of 2020, and announced an initial agreement in September of that same year. However, it has faced numerous legislative hurdles in its attempts to close the deal ever since then.
According to a new Bloomberg report, there has been little to no progress in the past 18 months, leading Nvidia to inform its partners that it doesn’t expect the deal with current Arm owner SoftBank to go ahead. Meanwhile SoftBank, for its part, is said to be preparing for an initial public offering (IPO) by way of an alternative to the Nvidia deal.
Arm supplies semiconductor chips to a number of tech companies, including Apple and Qualcomm, and it’s widely feared that Nvidia might be inclined to cut those companies off at some point in the future.
In August of last year we reported on the news that the UK’s Competition and Markets Authority had raised concerns that the new deal could “stifle innovation”.
More recently, the U.S. Federal Trade Commission sued to halt the transaction in December owing to the excessive power it would grant Nvidia. China, also, is said to be prepared to oppose the deal should it pass through elsewhere.
Away from government interference, a powerful group made up of Qualcomm, Microsoft, Intel, and Amazon has reportedly been lobbying regulators to kill the deal.
The official line of both Nvidia and SoftBank is that they are hopeful of a deal, but it now seems likely to be halted.
The Trusted Take
I have to say, I’m quite happy to see that Nvidia’s acquisition of Arm may not go through. One of Arm’s biggest strengths is its neutrality, allowing it to have multiple customers throughout the tech industry from Apple to Qualcomm. But if Nvidia were to take ownership, then I’d be worried that it could cause a conflict of interest for both current and future ARM customers.
I’m also not a fan of monopiles, and I reckon Nvidia absorbing Arm could well be entering that kind of territory. Nvidia is currently the second most-valuable chip maker (only behind TSMC) and with Arm recently seeing remarkable progression (as emphasised with Apple’s M1 chips) Nvidia could leap into a seriously strong position compared to its rivals.