Nvidia's bold $40 billion bid for chip designer Arm has been in trouble for months, after regulatory impediments in Europe, the U.K. and the U.S. have threatened to disintegrate the deal. It might be time for Plan B.
Bloomberg News said Tuesday that both Nvidia and current Arm owner SoftBank have begun to quietly make preparations to put an end to the proposed transaction. Nvidia has told partners it doesn’t expect the deal to go through, and SoftBank is prepping to take Arm public via an initial public offering, the report said.
Should the deal fall through, SoftBank would get to keep a nearly $1.3 billion breakup fee from Nvidia.
Ever since Nvidia announced the deal in 2020, industry veterans and financial analysts alike have said that there was no path to successfully bringing the deal home. In addition to regulators around the world, the acquisition has faced opposition from some of the most important chipmakers in the world, such as Qualcomm and Intel, but also big tech companies: Amazon and Microsoft have both actively sought to torpedo the bet.
Industry and tech opposition is no shock: Arm develops the designs other companies like Apple can license to make chips themselves, and is considered something of a neutral distributor as a result. Arm designs power thousands of products ranging from auto chips to smartphone processors. Putting Arm under Nvidia’s control would theoretically give it access to what its rivals are working on.
If the deal does close, it would be the largest in Nvidia’s history. Having Arm’s designs under Nvidia’s roof would also give the company access to server processor designs that would further open the data center market. Combined with the manufacturing prowess of TSMC, it would also vault Nvidia into a more competitive position against Intel.
A spokesperson for Nvidia said in a statement: “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.”
"We remain hopeful that the transaction will be approved," a Softbank spokesperson said in a statement.
This story was updated with a comment from Softbank.