Nvidia’s $40 billion Arm acquisition is now ‘highly unlikely’ to go through, analyst says

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  • The deal is facing an increasing number of regulatory scrutiny.
  • “I believe it’s highly unlikely,” Gartner chip analyst Alan Priestley told Businesshala.
  • The deal was due to be completed by March 2022 but Nvidia CEO Jensen Huang acknowledged in August that it would probably go beyond that date.

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According to Gartner Semiconductor analyst Alan Priestley, Nvidia’s $40 billion acquisition of the UK chip designer arm is unlikely to move fast.

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Pointing to concerns in the UK, EU, US and China, Priestley said the deal is facing an increasing number of regulatory scrutiny around the world.

“I believe it’s highly unlikely,” Priestley told Businesshala on Wednesday. Nvidia and Arm did not immediately respond to Businesshala’s request for comment.

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The deal was due to be completed by March 2022 but Nvidia CEO Jensen Huango recruited in august that he will probably overtake that date.

Arm was spun off from an early computing company called Acorn Computers in 1990. The company’s energy-efficient chip designs are used in 95% of the world’s smartphones and 95% of chips designed in China. company, Bought by Japan’s SoftBankco for £24 billion ($32 billion) in 2016, licenses its chip designs to more than 500 companies that use them to make their own semiconductors.

Critics worry that a merger with Nvidia — which designs its own chips — could restrict access to Arm’s “neutral” semiconductor designs and lead to higher prices, fewer options and less innovation in the industry. But Nvidia argues that the deal will lead to more innovation and that branch will benefit from the increased investment.

regulatory board

While the US chip giant Broadcom has come out in support of the deal, many others are against it.

Rival Qualcomm has said Nvidia could limit the supply of Arm’s technology to its competitors or raise prices. Google and Microsoft have raised similar concerns with regulators, according to Businesshala,

In November, the UK government announced it wanted a full investigation into the acquisition of Arm, which is headquartered in Cambridge and widely seen as the jewel in the British tech sector’s crown.

Digital and Culture Secretary Nadine Dorries “Phase 2” investigation ordered in dealing. The investigation – to be carried out by the Competition and Markets Authority over a 24-week period – will investigate antitrust concerns and national security issues.

In the US, the Federal Trade Commission there are also concerns about the deal. On the fourth-quarter earnings call, Nvidia said it is in discussions with the agency about “measures to address those concerns.”

Meanwhile, the European Commission, the EU’s executive arm, launched its own in-depth investigation into the deal in October.

“While Arm and Nvidia do not compete directly, Arm’s IP is an important input into products competing with Nvidia, for example in datacenters, automotive and the Internet of Things,” said European Commission Executive Vice President Margrethe Vestager. Statement. “Our analysis suggests that the acquisition of Arm by Nvidia may limit or degrade access to Arm’s IP, with distorting implications in many markets where semiconductors are used.”

In China, the state-backed Global Times newspaper said the deal was “troubling” and urged regulators to behave with caution.

Branch IPO?

People have been wondering if the deal would be allowed by regulators since the first announcement.

Last October, tech investors Ian Hogarth and Nathan Beneich were among the first to publicly predict that it would be blocked.

“We wouldn’t be surprised at all if someone blocked it,” Hogarth, who sold his start-up Songkick to Warner Music Group before becoming an angel investor, told Businesshala at the time.

Speaking to Businesshala this week, Gartner’s Priestley said that SoftBank will likely try and list Arm on the stock market if the Nvidia deal fails.

“They’ll probably try and IPO it,” he said.

The London Stock Exchange and New York’s Nasdaq stock exchange are two possible listing destinations, but Priestley said he wasn’t sure how well Arm would fare on its own.

“The issue with Arm, and the issue facing SoftBank, is how it drives its revenue,” Priestley said. “IP licensing is great but it’s really hard to squeeze.”

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