It was big news when NVIDIA announced its intention to purchase ARM Holdings for $40 billion back in September 2020. But now, there's speculation that NVIDIA might be backing away from the acquisition. Neither company has confirmed whether the deal is still on, but there are a few reasons why NVIDIA might be reconsidering.
First of all, the acquisition has come under scrutiny from regulatory agencies. In fact, there have even been lawsuits filed against it. The importance of ARM cannot be overstated. Nearly all phones on the market use processors licensed under the ARM architecture. Many tablets are also built using processors licensed under the ARM chipset. The biggest exception to the tablet rule has been the Surface line, though even the Surface Pro X.
So, why all the scrutiny? ARM is a dominant player in the mobile market. The worry is that NVIDIA would have too much control over that market if it were to purchase ARM. That could lead to higher prices and fewer choices for consumers. In fact, there are already concerns that NVIDIA might use its ownership of ARM to favor its own products over those from competitors. NVIDIA may be worried that the acquisition could face delays or even be blocked, which would obviously impact its bottom line.
NVIDIA also has to consider the competition it would be facing if it went through with the acquisition. ARM Holdings is a well-known and respected company, but it's not the only one in this space. There are other semiconductor manufacturers that NVIDIA would need to compete against if it bought ARM, and that might not be something NVIDIA is interested in doing right now.
Nearly everyone involved in the ARM ecosystem, from Qualcomm to Microsoft, are worried about the relationship between NVIDIA and ARM. Even Intel has expressed concerns over the impact the acquisition might have on the industry. For Intel, the issue is over the expansion of NVIDIA in the market. However, for some, it's a little different.
For those who produce ARM processors, the issue NVIDIA might be facing is licensing disagreements with ARM Holdings. These disagreements could delay or even stop the acquisition from going through altogether. It's possible that NVIDIA has been unable to come to an agreement with ARM on how existing licenses will be managed after the acquisition goes through. This could be another reason why NVIDIA is reconsidering its plans.
Finally, there's the issue of how expensive the purchase would be. $40 billion is no small sum, and NVIDIA might not want to risk such a large investment on an uncertain venture. On top of expense of the acquisition itself, the cost of fighting court cases against companies. The reality is, at this point, that the deal is going to fall apart anyway because of the issues mentioned above.
All in all, it's possible that NVIDIA is reconsidering its plans to purchase ARM Holdings. There are a number of reasons why this might be the case, from government scrutiny to competition to the huge price tag. We'll just have to wait and see what happens next.