When NVIDIA announced its plans (opens in new tab) to take over the British semiconductor designer Arm Ltd., the deal has raised a lot of eyebrows of regulators from across the world. Today, according to the latest report from Bloomberg, Nvidia's acquisition of Arm could be potentially blocked by the UK government.
Back in October of 2020, Nvidia announced a definitive agreement with Softbank to acquire the UK's top supplier of semiconductor designs, Arm Ltd., for a whopping amount totalling $40 billion. Softbank is expected to remain a shareholder at Arm, totalling less than 10% of the company Nvidia is trying to acquire.
However, the sheer size of the deal caught the attention of many regulators from across the world. Perhaps the biggest potential threat to the deal is the effort of the UK government to investigate the deal and look for any potential national security concerns that may occur.
We have previously reported that the European Commission is a potential deal-breaker for the acquisition, as Nvidia has to submit all the paperwork by September of this year. In the best-case scenario, the paperwork will be processed in six months, meaning that the deal could get approval by March 2022. However, experts note that the best-case scenario is unlikely.
According to the latest report, the UK government has conducted an investigation of the deal and delivered its assessment in late July, just a few days ago, about the deal. In the report, the government states that there are national security concerns, which could prevent the governing body to approve the deal.
As the investigation is still in the process, no one made a final decision that could block the deal, and Nvidia is working with the regulators to resolve any issues that may occur. According to the Nvidia spokesman for Bloomberg: "We continue to work through the regulatory process with the U.K. government," continuing that "We look forward to their questions and expect to resolve any issues they may have."
For any further details of the deal, we have to wait for more information to come out from Nvidia or the regulators overseeing the deal. As Nvidia believes that the deal should be processed without problems and that the company is ready to work with the government, it should provide some security to investors hoping to see Nvidia finalize the merger.
Right now, ARM's customers are exactly that, "customers". After Nvidis acquires ARM, those customers suddenly become competitors. Nvidia will keep the best ARM design for itself, and give those ex-cutomers sloppy seconds. Nvidia needs to have a superior ARM products than Nvidia's new competitors.
Jensen has zero incentive in keeping his word, and a lot to gain by breaking it. And that's why he will break his word, that and the fact that we do know his true colours anyway.
This deal is good for Nvidia, and bad for just about everybody else on this planet. Anybody who says otherwise is either a deranged fanboy, or owns Nvidia stock.