Nvidia prepares to abandon US$40 billion Arm bid amid antitrust scrutiny

Nvidia told partners that it does not expect the deal to close, which would leave it with a US$1.25 billion break-up fee after paying US$2 billion at signing

Arm customers such as Qualcomm, Microsoft, Intel, Amazon, and Google are against the deal, arguing Nvidia would not be able to preserve Arm’s independence

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Published: 10:00am, 26 Jan 2022Updated: 5:42pm, 25 Feb 2022

Nvidia Corp is quietly preparing to abandon its purchase of British chip design company Arm from SoftBank Group Corp after making little to no progress in winning approval for the US$40 billion chip deal, according to people familiar with the matter.

Nvidia has told partners that it doesn’t expect the transaction to close, according to one person, who asked not to be identified because the discussions are private. SoftBank, meanwhile, is stepping up preparations for an Arm initial public offering as an alternative to the Nvidia takeover, another person said.

The purchase – poised to become the biggest semiconductor deal in history when it was announced in September 2020 – has drawn a fierce backlash from regulators and the chip industry, including Arm’s own customers. The US Federal Trade Commission sued to stop the transaction in December, arguing that Nvidia would become too powerful if it gained control over Arm’s chip designs.

The acquisition also faces resistance in China, where authorities are inclined to block the takeover if it wins approvals elsewhere, according to one person. But they don’t expect it to get that far.

Both Nvidia and Arm’s leadership are still pleading their case to regulators, according to the people, and no final decisions have been made. And through it all, the companies have publicly maintained their commitment to the purchase.

“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.

“We remain hopeful that the transaction will be approved,” a SoftBank spokesperson said in an emailed statement.

Nvidia shares fell as much as 5.6 per cent to US$220.70 in New York on Tuesday. SoftBank’s US depository shares slid 4.9 per cent.