It’s looking increasingly unlikely that Nvidia’s (NASDAQ: NVDA) ARM acquisition will receive regulatory approval after the Federal Trade Commission (FTC) announced it was suing to block the $40 billion deal. The U.S. isn’t alone in its decision — U.K. regulators want a full investigation before approval is given.
What would the ARM acquisition mean for investors?
It would be a massive win for Nvidia, allowing the GPU giant to break into new markets — particularly consumer segments. Phone, tablets, wearables, smart home devices, and smart cars are ARM’s biggest product categories, with 95% of premium phones powered by ARM, according to the chipmaker.
On top of that, it would allow Nvidia to scale its data center business, for which ARM is already a key supplier. Nvidia argues that the deal would, in fact, harness innovation, not destroy it. As one of the biggest investors across all industries in research and development itself, it can provide ARM the capital it badly needs to do the same.
Why is the deal being blocked?
Well, Nvidia would gain massive control over the supply chain and pricing of its deemed competitors, all of which use ARM chips in their products. It’s not just regulators blocking the deal either, poor old big tech isn’t too happy either. Qualcomm, Microsoft, and Google were all quick to oppose the deal.
If the deal doesn’t go through, it will mean ARM will likely have to go the IPO route — and Qualcomm has been quick to say it would be happy to invest. How honorable and selfless of them.
For now, it isn’t looking too good for Nvidia so interested investors might just have to keep their ears to the ground for an IPO announcement if they want to scoop up shares in ARM.
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Financial Writer at MyWallSt
David's favorite stock is Google. He's a daily user of its YouTube platform, where you can learn or find something brand new at the touch of a button. He believes the company will continue to grow for many years to come.