Tuesday, February 23, 2021, at Nvidia headquarters in Santa Clara, California.
David Paul Morris | Bloomberg | Getty Images
Nvidia is “quietly” preparing to abandon its $40 billion takeover of British chip designer Arm, Bloomberg reported on Tuesday.
The U.S. chipmaker has told partners that the deal is not expected to be finalized, the news agency reported, citing people familiar with the matter. SoftBank, which currently owns Arm, is gearing up to take Arm public in lieu of an Nvidia takeover, Bloomberg reported.
An Nvidia spokesperson told CNBC via email: “We continue to hold the views detailed in our latest regulatory filing – that this transaction provides an opportunity to accelerate Arm and foster competition and innovation.”
SoftBank and Arm had no immediate comment when contacted by CNBC.
Nvidia shares were down about 3 percent in U.S. premarket trading.
The deal faces close scrutiny from regulators around the world, who fear it could give Nvidia an unfair advantage in the semiconductor industry.
The U.S. Federal Trade Commission sued last month to block the deal on antitrust grounds, while U.K. regulators are investigating the deal over concerns it poses a threat to national security. Nvidia also faces multiple regulatory hurdles in China, where Arm formed a joint venture with private equity firm Hopu Investments.
Arm is often considered the “jewel in the crown” of the UK tech industry. Its energy-efficient chip architecture is used in 95% of the world’s smartphones and 95% of chips designed in China. The company profits from royalties paid by manufacturers.
You can read the full Bloomberg report here.
– Sam Shead, CNBC contributed to this report
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