Nvidia’s $40B Arm deal takes longer than expected

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Nvidia said on Wednesday that talks with regulators to clear its $40-billion acquisition of the British semiconductor technology firm Arm are taking longer than anticipated.

The disclosure came as Nvidia, the world’s premier maker of graphic chips for gamers and artificial intelligence chips for data centers, forecast Q3 revenue above Wall Street estimates due to a boom in demand.

Investors are, however, focusing on whether Nvidia’s move to acquire Arm will go through, given the regulatory scrutiny, by March 2020, as Nvidia has promised. Arm has been a neutral supplier of technology in the chip industry, making Nvidia’s move a threat to competitors like Qualcomm, who do not want to see it owned by a rival.

What Nvidia says

Colette Kress, Nvidia’s Chief Financial officer, said the company is still confident that the deal will get approval. She said that even though some Arm licensees have expressed concerns or objected to the acquisition with regulators, the GPU-maker still thinks the deal will happen.

Kress added that the regulators should see the benefits of acquiring Arm, the industry, and its licensees.

Nvidia’s shares went down by 2% but rose 2.8% later when executives, on a call with analysts, predicted that gaming chips prices would go up.

Nvidia by the numbers

Logan Purk, an analyst at Edward Jones, said that many investors think that the deal may not get approval. If it is blocked, Purk added, it will be met with ‘a collective shrug.’

IBES data from Refinitiv indicates that the current quarter revenue is $6.80 billion (plus or minus 2%). Analysts, on average, expected $6.53 billion. Nvidia managed to beat expectations for Q2, with a 68% rise to $6.51 billion.

Datacenter and gaming revenue clocked in at $2.37 billion and $3.06 billion respectively. Adjusted profit for Q2 was $1.04 per share, compared to the estimate of $1.01 per share.