Investing in Nvidia Stock (NVDA)

On Sept. 13, 2020, NVIDIA announced that it had agreed to acquire Arm Ltd., a U.K.-based semiconductor and software company specializing in AI, from Japan-based SoftBank Group Corp. (SFTBY) and the SoftBank Vision Fund for $40 billion. NVIDIA said that it expected the transaction to close in approximately 18 months. But the deal has come under intense scrutiny from regulators worldwide, and is thus unlikely to be completed within the original timeframe, if at all.

On Dec. 2, 2021, the U.S. Federal Trade Commission (FTC) sued to block the acquisition on antitrust concerns after a unanimous vote by commission members. The FTC said that the combination of the two chip companies would give NVIDIA unlawful control over technology that rival firms need to develop competing products. The commission also said that the combination would create the potential for a stifling of innovation in next-generation technologies, such as technologies used to power data centers and driver-assistance systems in cars. An administrative trial is scheduled to begin on Aug. 9, 2022, nearly two years after the deal was announced.

Weeks earlier, on Nov. 16, 2021, the U.K.'s antitrust regulator, the Competition and Markets Authority (CMA), launched an expanded investigation into the proposed deal. The CMA said that it would be looking into antitrust concerns and national security issues associated with the acquisition. The CMA's latest investigation follows an initial Phase One investigation into the potential competition implications of the deal. The new Phase Two investigation is expected to take 24 weeks before a final report is delivered to U.K. Digital Secretary Nadine Dorries. On Jan. 10, 2022, both NVIDIA and Arm submitted a 28-page report to the CMA outlining why the deal should be approved. In addition to U.S. and U.K. regulators, the proposed NVIDIA-Arm deal faces scrutiny from regulators in the European Union and China.

On Feb. 7, 2022, SoftBank Group and NVIDIA announced that they were ending talks of the acquisition due to "significant regulatory challenges." Arm licenses significant technologies used in chips by NVDIAs rivals which raised major antitrust concerns to regulators who believed that NVIDIA could use to give its products a major advantage. SoftBank is now looking into a potential IPO for Arm.