Investors predict that Nvidia’s $40 billion Arm acquisition will fail

Earlier last month, Nvidia announced its plan to purchase SoftBank’s Arm in a $40 billion acquisition deal. However, two tech investors and AI experts say there is a good chance that the deal will be blocked.

In a Thursday report published on the ‘State of AI’, artificial intelligence experts Nathan Beniach and Ian Hogarth listed eight predictions for the tech industry over the next 12 months. One of the eight predictions is that “Nvidia does not end up completing its acquisition of Arm.”

After the U.S. chip giant announced its intentions to purchase Arm from Chinese-based SoftBank, the acquisition has since been criticized by British lawmakers, and others including Arm co-founder Hermann Hauser. Two of the main concerns raised by critics were are that Nvidia could likely disrupt Arm’s business model and make the company’s staff in the U.K. redundant.

The U.K. opposition Labor party also criticized the Arm takeover by saying it wasn’t in the best interest of the economy. The party also criticized the present government, the conservative party, for allowing the first Arm takeover by China’s SoftBank.

In response to the criticisms and accusations, Nvidia says Arm will still have its headquarters in Cambridge under the deal. Also, the chipmaker giant said it will create more jobs in the U.K. and build a new supercomputer in the region.

Hogarth, an angel investor and tech expert told CNBC that they “wouldn’t be surprised at all if it [the deal] was blocked by somebody” due to the fact that there has been a lot of talks on “technological sovereignty” in the last decade. There’s also been a lot of U.S.-China, U.S.-U.K, and U.S.-Russia tech tensions in the last two decades.

Beniach, a general partner at Air Street Capital venture firm and founder of AI meet-up group London AI also said that there was certainly a “non-zero, maybe a high non-zero, chance it doesn’t happen”, speaking about the Nvidia acquisition.

Nvidia was reported to have previously stated that the acquisition deal will benefit both companies, including their customers and the industry and large.

“For Arm’s ecosystem, the combinations will turbo charge Arm’s R&D capacity and expand its IP portfolio with NVIDIA’s world-leading GPU and AI technology.”

Arm is regarded as one of the U.K.’s priceless chipmakers in the tech industry. Its chips are used by major companies all over the world to power millions of electronic and digital devices. For example, iPhone maker, Apple uses Arm’s chips to power its iPhones and iPads. The world’s largest e-commerce store, Amazon uses Arm’s chips to power Kindles, and some automakers also use Arms chips in their vehicles.