NVIDIA may drop $40 billion Arm acquisition amid global concern

Nearly two years after Nvidia announced its acquisition of Cambridge-based chip designer Arm from SoftBank Group Corp., the $40 billion buyout — now valued at more than $75 billion — appears to be falling apart.

Nvidia reportedly backed out of acquiring Arm, citing its expectation that the deal would fall through, according to Bloomberg. If Nvidia pulls out of the acquisition, it will be forced to repay the $2 billion fee paid to SoftBank and Arm. SoftBank’s efforts to prepare an Arm initial public offering (IPO) support claims that Nvidia is looking for the way out, Bloomberg reports.

News of Nvidia’s potential withdrawal comes after months of scrutiny by various governments, including the US and UK. ). The investigation follows the US Federal Trade Commission’s (FTC) lawsuit to block the $40 billion semiconductor deal. China could also challenge the deal if it were to be made in other countries, according to Bloomberg.

Arm and Nvidia recently made their case to the CMA in a detailed and in-depth document in which the companies claimed the acquisition would enhance console competition. Given these efforts to convince the UK of the legitimacy of the agreement, the statements of Nvidia and SoftBank are not a surprise since nothing is set in stone.

“We continue to support the views expressed in detail in our latest regulatory filings that this transaction provides an opportunity to accelerate Arm and drive competition and innovation,” said Nvidia spokesperson, Bob Sherbin.

SoftBank also appears publicly optimistic in its brief statement.

“We remain hopeful the transaction will be approved,” a SoftBank representative said in response to Bloomberg.

The agreement between Nvidia and SoftBank is no longer valid after September 13, 2022. If the talks offer enough progress, the option to extend the agreement is there. However, the agreement must be approved by the European Union, the United States and the United Kingdom. Even after gaining approval from these entities, Arm and Nvidia will also have to take on China, which seems like a long shot given US efforts to lock China out of TSMC chips. .

Teresa H. Sadler