Nvidia says talks on a $40 billion arms deal take longer than expected

Nvidia said on Wednesday that talks with regulators to release its $40 billion (about INR 2.97.905 million) proposed takeover of British semiconductor technology company Arm are taking longer than expected.

The release came as Nvidia, the world’s largest maker of gamer graphics chips and data center artificial intelligence chips, forecasts third-quarter revenue above Wall Street’s expectations on Wednesday as it benefits from a boom in demand.

But investors have focused on whether Nvidia’s decision to acquire Arm will withstand regulatory scrutiny and close in March next year, as Nvidia has promised. Arm has been a neutral technology provider throughout the chip industry, and Nvidia’s competitors such as Qualcomm objected to Arm falling into the hands of a rival.

In a statement, Nvidia’s chief financial officer, Colette Kress, said the company was still confident the deal would close.

“While some Arm’s licensees have expressed concerns or objections to the transaction and discussions with regulators are taking longer than initially thought, we are confident in the deal and that regulators should recognize the acquisition benefits for Arm, its licensees and industry,” she said.

Shares in Nvidia fell 2 percent but rose after executives predicted higher selling prices for game chips in a conference call with analysts.

“Many investors already put a low probability that the deal will pass. If it gets blocked, I think it will be met with a collective shrug,” said Logan Purk, an analyst at Edward Jones.

The company has estimated current quarter revenue at $6.80 billion (approximately Rs. 50,591 million), plus or minus 2%. Analysts expected, on average, $6.53 billion (about INR 48,582), according to IBES data from Refinitiv.

Nvidia also beat second quarter revenue expectations with an increase of 68% to $6.51 billion (about Rs. 48.433 million). Data center and gaming revenue were $2.37 billion (about Rs. 17,632 million) and $3.06 billion (about Rs. 22,765 million) respectively, beating analyst estimates of $2.3 billion (about Rs. 17,111 million) and $2.94 billion (about Rs. 21,873 million)), according to data from Refinitiv.

The company said second-quarter adjusted earnings were $1.04 (about Rs. 77.36) per share, against estimates of $1.01 (about Rs. 75.12) per share, from according to data from Refinitiv.

Nvidia shares initially fell 2 percent in after-hours trading after the results were released, but then rose 2.8 percent.

© Thomson Reuters 2021


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