The $40 billion Nvidia-Arm deal, which would have been the largest semiconductor deal ever, is reportedly on the verge of being called off. The purchase deal announced back in September of 2020 has not gone too well within the chip industry. There has been backlash from various regulators, companies, and customers, arguing that Nvidia’s control over Arm would mean immense power for Nvidia – which is already the most valuable semiconductor company in the US.

According to the latest report (via Bloomberg), “Nvidia Corp is preparing to abandon its purchase of Arm Ltd.” SoftBank, which currently owns Arm, has instead been preparing to launch an Arm initial public offering (IPO) if the Nvidia deal was not to go ahead as planned for some reason.

Nvidia, on the other hand, has reportedly “told” its “partners” that it does not “expect” the deal with Arm to close as anticipated. The Arm deal would have, however, added another feather to Nvidia CEO Jensen Huang’s cap, who has pioneered the graphics-card manufacturer into a chipmaking frontrunner.

The biggest tech companies currently rely on Arm and fear losing the “unfettered access to Arm technology” if Nvidia acquired the business. Additionally, the deal has been facing issues with regulators like the U.S Federal Trade Commission, which sued to halt the deal in December 2021.

British and EU regulators also have the deal under scrutiny and it faces the danger of being blocked in China if the acquisition was to be carried out. The watchdogs believe the deal will increase prices and decrease innovation and choice. Nvidia has maintained that the acquisition will “provides an opportunity to accelerate Arm and boost competition and innovation.”

According to the report, Nvidia and Arm are both “pleading their case to regulators and customers” and SoftBank is hopeful of the “transaction” being approved. But Nvidia’s idea of stepping back from the deal could come as a jolt for Arm and it may have to persist its way to go public as an alternative to the takeover.