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Nvidia reportedly prepares for un-Arm'd combat with rivals: $40bn takeover may be abandoned
Softbank, meanwhile, remains 'hopeful' it can offload Brit chip designer
Nvidia is quietly preparing to give up on the purchase of Arm, according to Bloomberg, after repeatedly butting heads with competition regulators amid a wave of opposition from the tech industry.
A report by the newswire states Nvidia privately told its partners it does not expect the Arm transaction to close. The report also claims Arm's current owner SoftBank is pressing ahead with an IPO of Arm.
The $40bn bid Nvidia lodged for Arm in September 2020 has proved controversial: Arm licences its chip designs to multiple clients and some felt that buying the company will give Nvidia the power to stifle competition.
Tech giants including Qualcomm, Microsoft, and Intel voiced concerns to regulators, leading to deep investigations being opened on three continents.
Late last year, the US Federal Trade Commission expressed its concerns regarding the takeover; the European Commission announced an antitrust investigation, and Nvidia confirmed it was also talking to China's Antitrust Authority.
In November 2021, the UK government blocked the transaction, asking the Competition and Markets Authority (CMA) to launch a Phase Two probe into the deal's potential to harm competition – for example, if Nvidia were to restrict access to Arm's CPU blueprints.
This second, more serious stage means the British administration is also scrutinizing national security concerns.
- A 'national security' issue: UK.gov blocks Nvidia's Arm deal for now, inserts deeper probe
- EC president promises European Chips Act to quadruple homegrown production by 2030
- US mergers doubled in 2021 so FTC and DoJ seek new guidelines to stop illegal ones
- Microsoft poaches Apple chip expert for custom silicon
Earlier this month, the CMA published Nvidia and Arm's response to the watchdog's findings so far regarding the proposed takeover. The pair claimed there would be no incentive to block access to Arm's IP, as such a move would restrict Arm's revenue and damage Nvidia's investment.
Furthermore, the two argued that Softbank spinning out Arm as a standalone company, as opposed to allowing Nvidia to absorb Arm, would result in it lacking the resources to compete against rivals such as Intel. And Arm would be under pressure from investors to deliver short-term revenue growth and profitability at the expense of long-term planning to gain share in the data center server market.
An Nvidia spokesperson told The Register it still thinks pursuing Arm is a good idea all round:
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.
SoftBank's response to our queries also had a familiar ring to it, with a spokesperson stating that: "We remain hopeful that the transaction will be approved."
Arm, for its part, declined to comment.
With the CMA's probe set to last at least until March, not to mention investigations taking place in mainland Europe, China and the US, it is entirely possible that all parties are privately tiring of the drawn-out nature of the sale, despite what they say publicly. ®