Nvidia’s $40 billion bid to buy Arm Holdings from Japanese mega-conglomerate SoftBank may be in trouble. During the chipmaker's second-quarter fiscal year 2022 earnings call, Nvidia CFO Colette Kress warned the acquisition is taking longer than initially thought.

“We are working through the regulatory process, although some Arm licensees have expressed concerns and objected to the transaction, and discussions with regulators are taking longer than initially thought,” she said. “We are confident in the deal and that regulators should recognize the benefits of the acquisition.”

Until now, Nvidia has maintained the deal is on track to close 18 months after it was announced last September despite mounting regulatory hurdles in Europe and China. It now appears Nvidia will miss this timeline.

Under the terms of the acquisition, Arm will continue to operate out of its headquarters in Cambridge, England, and it will retain its brand, open licensing, and customer neutrality. At the time, Nvidia also said it would build an Arm-based supercomputer on Arm’s campus, and license many of its own semiconductor technologies via the chip designer’s well-established licensing model.

However, in January, British government officials launched an antitrust investigation, and in April the United Kingdom announced it would intervene in the deal on national security grounds.

During the Six Five Summit in June, Nvidia and Arm CEOs Jensen Huang and Simon Segars attempted to downplay these challenges.

“The two of us don’t do the same things and nor do we do it in the same ways for the same markets. Arm is a world class CPU IP company and the most popular CPU core in the world,” Huang said at the time. “Nvidia is a platform technology company. We’re about the peripherals, the accelerated computing, the software stack.”

Segars also attempted to dissuade concerns over national security, export control, and data sovereignty.

“Export control is a function of where a product is created, and the nationality of the people that worked on the product. It’s got nothing to do with the nationality of the company that owns the product itself,” he said in reference to concerns that if U.S.-based Nvidia acquired Arm, it could be subject to the U.S. government entity list.

As a result of this regulatory gymnastics, CCS Insight CEO Geoff Blaber expects the deal could take more than two years before it’s either approved or collapses.

“SoftBank should be nervous. Nvidia can afford to play the long game,” he wrote in a blog post earlier this month.

Even with support from several of Arm’s largest customers — Broadcom, Marvell, MediaTek, and MediaTek — Blaber adds “the deal is unlikely to see any real progress before September.”

Despite the regulatory opposition, Patrick Moorhead, president and principal analyst at Moor Insights and Strategy, remains optimistic the deal will pass regulatory muster. “The situation in China is fluid. While the UK via the EU has had some issues, I think they’re more political than anything else,” he wrote in response to questions.

While Nvidia waits out regulators, the chipmaker raked in record revenues, which grew 68% year over year to $6.5 billion during the second quarter of fiscal year 2022.

“We set records for total revenue, as well as for gaming, data center, and professional visualization,” Kress boasted.

Gaming again proved to be the company’s strongest growth area, accounting for $3.06 billion of revenues. Data center revenues grew nearly 34% year over year to $2.37 billion driven in large part by hyperscale and cloud demand.

“Our flagship A100s continued to ramp across hyperscale and cloud computing customers,” Kress said. “Microsoft Azure announced general availability in June, following AWS and Google Cloud Platform’s availability in prior quarters.”

Kress also called out professional visualization revenues, which encompass a wide swath of applications like automotive, healthcare, and the public sector. “Q2 revenue was a record 519 million, up 40% sequentially and up 156% year on year,” she said of the business unit.

Looking to Q3, Nvidia expects to grow revenues to $6.8 billion.

“We expect another strong quarter with sequential growth driven largely by accelerating demand in data centers,” Kress said, adding that the company anticipates sequential growth across all verticals.