Why NVDA Falls?

Nvidia asks EU to approve Arm deal. A ruling is due next month

The European Union is set to rule in October on Nvidia's $40 billion plan to buy the chip technology maker Arm, marking another regulatory milestone to be passed before the deal can go through.

Shares of $NVIDIA(NVDA.US)$ fell 1.4% to $223.39 in Wednesday trading.

The EU has set Oct. 13 as the deadline to make a ruling on the plan to buy Arm, according to the Commission's website, after the company filed for regulatory clearance Wednesday. The request kicks off a 25-day preliminary review that could lead to a full-scale 90-day investigation if Nvidia doesn't offer concessions, Reuters has reported.

We are working through the regulatory process and we look forward to engaging with the European Commission to address any concerns they may have. This transaction will be beneficial to Arm, its licensees, competition, and the industry."

-Nvidia said in a statement.

The deal would upend the chip industry. It faces opposition from several large tech companies such as $Qualcomm(QCOM.US)$ and $Microsoft(MSFT.US)$, as well as a potential in-depth investigation from U.K. regulators. It also must receive approval in the U.S., and China, among other places.

Tuesday, the Financial Times reported that Nvidia also faces fresh opposition from within the EU itself and that concessions the chip company has offered weren't enough to assuage officials' concerns.

Owned by the Japanese investor SoftBank, Arm licenses intellectual property to the likes of $Apple(AAPL.US)$, $Amazon(AMZN.US)$, and others, allowing them to use its designs to make chips for mobile phones and computer processors. Arm's independence -- the fact that is doesn't make chips itself -- has long been central to its licensing process. Nvidia has vowed to keep it neutral.

Still, the U.K.'s Competition and Markets Authority has expressed concerns about how competition could be affected if Nvidia owns Arm, which is based in the U.K.. It also may block the deal on national security grounds.

Nvidia had initially said the deal would close in early 2022, but in a recent earnings call the company said completion of the deal would take longer. It didn't offer a fresh timeline.

The deal must be completed by September of next year, or Nvidia would have to pay SoftBank $1.25 billion.