Nvidia To Drop $40 Billion Arm Deal
Nvidia tells partners that it doesn’t expect the $40 billion Arm acquisition deal to close.
In September 2020, American GPU designer Nvidia first announced their plans to purchase UK based mobile chip provider, Arm. Arm provides blueprints for more than 90% of mobile chips. This means that major cellphone manufacturing companies like Apple, Samsung and Huaweir rely on Arm for their chip designs. Nvidia had hoped that through the acquisition of Arm they could combine the energy efficiency of Arm with the power of Nvidia’s GPUs to offer a competetive alternative to Intel.
UK interferance in 2021
Almost a year after Nvidia had started the process of acquiring Arm, the UK government halted the deal on worries that Nvidia could use Arm to raise prices or lower the quality of their rivals’ services since their rivals relied on Arm technology. Digital secretary Oliver Dowden offered a statement at the time saying that he wanted the implications of the deal to be assessed. “Following careful consideration of the proposed takeover, I have today issued an intervention notice… As a next step and to help me gather the relevant information, the UK’s independent competition authority will now prepare a report on the implications of the transaction, which will help inform any further decisions.”
The current situation in 2022:
An anonymous source has revealed that Nvidia told their partners that they don’t expect the transaction to close. In the mean time, SoftBank is preparing for an Arm initial public offering should the Nvidia takeover not go through. Since the announcement of the takeover, which would have been the biggest semiconductor deal in history, there has been a major backlash from regulators in the industry including customers of Arm. In December 2021, the U.S. Federal Trade Commision sued to stop the transaction, claiming that Nvidia would be too powerful in the industry if they gained control over Arm’s chip designs.
Through all the adversity, there are those at Nvidia and Arm that remain hopeful. “We continue to hold the views expressed in detail in our latest regulatory filings — that this transaction provides an opportunity to accelerate Arm and boost competition and innovation,” Nvidia spokesman Bob Sherbin said. And in a statement from a SoftBank spokesperson, they had this to say; “We remain hopeful that the transaction will be approved,”
Nvidia’s shares fell by as much as 5.6% on Tuesday this week and SoftBank’s U.S depository shares dropped by 4.9%. Companies such as Qualcomm, Intel and Google have stated that Nvidia cannot preserve Arm’s independance because they are also a customer of Arm. While nothing has been made official yet, it does seem that the deal will not be able to overcome the adversity of so many large companies standing firmly against the idea.
