Nvidia Preparing To Abandon $40bn ARM Acquisition – Report

Facing many regulatory probes and lawsuits, Nvidia tells its partners it is preparing to abandon its acquisition of ARM Holdings

GPU powerhouse Nvidia has reportedly told partners that it is preparing to abandon its controversial purchase of British chip designer ARM Holdings from SoftBank Group.

It was back in September 2020, after months of rumours, when it was confirmed that ARM was to be sold to Nvidia for a hefty $40 billion (£31.2bn).

But the acquisition immediately encountered vigorous opposition, and the deal is currently facing regulatory investigations in the UK, US, and Europe.

Acquisition concerns

Perhaps the most pressing investigation is the UK probe, as ARM is after is a British firm.

In November the British government ordered a full Phase two investigation of the deal, amid strong signs the UK government could block the deal on national security grounds.

Prior to that in October the European Commission opened its long-touted probe, despite Nvidia offering it some undisclosed concessions.

Then in December the Federal Trade Commission (FTC) announced it was suing GPU powerhouse Nvidia to stop its acquisition of ARM.

The British chip designer is hugely important technology player, as ARM designs power 95 percent of the world’s smartphones, and there is concern at ARM’s sale to a single chip supplier could give Nvidia too much leverage in the market.

There is also concern the acquisition will harm competition by giving Nvidia access to the competitively sensitive information of ARM’s licensees, some of whom are Nvidia’s rivals, and that it is likely to decrease the incentive for ARM to pursue innovations that are perceived to conflict with Nvidia’s business interests.

Nvidia has repeated said it would not do this.

Nvidia withdrawing

Now Bloomberg has reported, citing people familiar with the matter, that Nvidia is preparing abandon its purchase of ARM.

The American GPU giant reportedly told partners that it does not expect the deal to close, while SoftBank is stepping up preparations for an initial public offering (IPO) of ARM.

An Nvidia spokesperson said the company continues to believe the acquisition “provides an opportunity to accelerate ARM and boost competition and innovation.”

In July last year ARM’s CEO, Simon Segars, strongly defended the Nvidia purchase, and said it was the best outcome for the British chip designer, and was a better solution than an IPO.