The American corporation Nvidia is preparing to abandon the takeover of the British microchip maker Arm, Bloomberg reported. The deal, which could become the largest in the industry, met with resistance from regulators in several countries.
Nvidia is preparing to quietly withdraw from its purchase of British semiconductor developer Arm Ltd. from Japanese SoftBank for $40 billion, as it met with resistance from regulatory authorities in different countries, Bloomberg reports, citing sources familiar with the preparation of the deal.
According to one of the interlocutors of the agency, Nvidia has already informed the participants in the deal about its decision. SoftBank at the same time stepped up preparations for Arm's IPO as an alternative to Nvidia's takeover, according to another Bloomberg source.
Nvidia and Arm executives are still trying to negotiate with regulators, and no final decisions have yet been made. Representatives from Nvidia and SoftBank reaffirmed their commitment to the deal in comments to the agency, expressing hope that it will be approved.
Nvidia announced plans to buy Arm from SoftBank Group in September 2020. If the takeover of Arm does go through, it will be the biggest deal in the industry. Now the record is considered to be the purchase of semiconductor manufacturer Broadcom by Avago Technologies for $37 billion in 2016.
But the deal has faced resistance from regulators in the UK, Japan and the US, as well as chipmakers, including numerous Arm customers, and it works with Apple, Samsung, Qualcomm, Huawei, Microsoft, Amazon and others.
In particular, in December, the US Federal Trade Commission filed a lawsuit to stop the deal, arguing that Nvidia would dominate the market if it gained control of Arm. The British government has also criticized the plans to take over Arm and fears that this will negatively affect national security. The deal must also be approved by EU and Chinese regulators.
Arm's sale is attracting increased regulatory attention as its chips are used to make a wide variety of electronics, from phones to car on-board computers and factory equipment, Bloomberg explains.
The world's largest tech companies rely on Arm technology and fear they could lose access to it after the Nvidia deal.
The original Arm takeover agreement between Nvidia and SoftBank expires September 13, two years after it was signed. It will automatically renew if the regulatory approval process takes longer.
The deal is being discussed against the backdrop of a global shortage of microchips. Due to restrictions during the pandemic, the demand for smartphones, laptops, desktop computers and “smart” devices connected to the Internet began to grow in the world, which manufacturers could not satisfy. According to TrendForce calculations, global demand for microcircuits was 10-30% higher than supply.
In the first four months of 2021, semiconductor makers began falling sharply behind schedule, according to Susquehanna Financial Group. The shortage of chips has also negatively affected the production of cars.