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Sources suggest that Nvidia is preparing to abandon its purchase of the UK-based chip designer, suggesting that “little to no progress” has been made after months of regulatory battles
Back in September 2020, Nvidia announced that it had bid $40 billion to purchase ARM,
The deal was immediately controversial for both corporate and political reasons, launching a host of regulatory investigations.
One of the main issues is that ARM’s designs are currently used by almost all of Nvidia’s major rivals, including the likes of Qualcomm and Intel, with these companies raising concerns that the purchase would allow Nvidia to block their access to ARM tech or charge them higher fees.
Nvidia has argued that ARM will be able to retain its independence in supplying these companies, but detractors disagree, writing to regulators that ARM cannot be independent while Nvidia itself is one of its major clients.
Meanwhile, the deal has faced considerable political opposition in the UK, with suggestions that the deal would see a loss of British jobs and hand over a major strategic national asset to the US. The company’s co-founder, Hermann Hauser, has even argued that the deal is akin to selling the UK’s technological crown jewels, saying that Nvidia’s assurances were “not worth the paper they are written on, unless they are legally binding”.
As a result of these concerns and others, various regulatory bodies in both the UK and the US have been called upon to block the deal. The UK’s Competition and Markets Authority (CMA) launched an investigation in January 2021, with a further probe launched in November.
“Ultimately, the CMA is concerned this loss of competition could stifle innovation across a number of markets, including data centres, gaming, the ‘internet of things’, and self-driving cars. This could result in more expensive or lower quality products for businesses and consumers,” said a CMA statement from the regulator in August last year.
In the US, meanwhile, the Federal Trade Commission (FTC) announced in December 2021 that they were suing to block the merger, aiming to “prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies”.
Despite this enormous opposition, both Nvidia and ARM owner SoftBank have continued to be outwardly positive about the deal, suggesting that the move would “boost competition and innovation” and should be approved by the regulators.
Now, however, it appears that the weight of regulatory pressure may be too much for the deal to survive after all, with sources telling Bloomberg that the deal could soon be scrapped.
According to reports, Nvidia has told partners that it no longer expects the deal to close.
If this is true and the deal does indeed fall through, the results will be particularly painful for Nvidia, with the company set to lose the $1.25 billion deposit it paid to SoftBank at the start of the process.
For SoftBank itself meanwhile, the deal’s collapse will likely engender a change of strategy. A separate source talking to Bloomberg suggested that SoftBank will likely seek to take ARM public in the event of the deal’s failure.
For now, there appears no end in sight for the regulatory battles facing the mega-merger. The initial agreement between the two companies will automatically renew in September this year if the approval process is not complete, but, if these reports are to be believed, Nvidia could feel forced to pull the plug before the deal reaches this two-year milestone.
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