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Nvidia Falls on Report It Plans to Drop ARM Takeover

Published 25/01/2022, 13:26
Updated 25/01/2022, 13:26
© Reuters

© Reuters

By Dhirendra Tripathi

Investing.com – Nvidia stock (NASDAQ:NVDA) traded 3.4% lower in premarket Tuesday on a Bloomberg report that it plans to abandon its pursuit of chip designer ARM from Japan-based Softbank.

The purchase would have handed Nvidia, a chipmaker, a prized asset at a time when capabilities related to chip designing and manufacturing are rare. ARM offers its designs to more than 500 companies that make their own chips.

According to the news service, the company has told partners that it doesn’t expect the transaction to close while Softbank (OTC:SFTBY) is now planning an IPO for ARM.

Nvidia had in September 2020 set an 18-month deadline to complete the takeover, but the transaction made little progress all this while, running into regulatory resistance in more than one country.

The deal divided the stakeholders into two camps. ARM customers like Broadcom (NASDAQ:AVGO), MediaTek (TW:2454) and Marvell Technology (NASDAQ:MRVL) supported the deal, The Sunday Times reported in June last year.

On the other side, Qualcomm (NASDAQ:QCOM) and Microsoft (NASDAQ:MSFT) were among those reportedly voicing fears that Nvidia could limit the supply of the company’s technology to its competitors or raise prices. 

The U.S. 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 U.K.'s Competition and Markets Authority, the regulator in ARM's home country, also opposed the deal.

The transaction would have faced tight scrutiny in China too where ARM has a joint venture with private equity firm Hopu Investments.

 

 

 

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