Nvidia’s $40 billion bid for Arm Holdings is a runaway train. And try as they might to keep it on track, regulators are all but guaranteed to derail the deal before long.

From the beginning, I was skeptical Nvidia’s bid to wrestle Arm away from Japanese mega-conglomerate SoftBank would ever play out. Now I’m convinced it never will.

I can’t deny the logic of the acquisition. For Nvidia and SoftBank, it was a deal made in heaven. SoftBank got to rebalance its books, and Nvidia gained access to Arm’s extensive portfolio of intellectual property, talent, and its licensing model — more on that later.

Yet I found it hard to believe Nvidia would ever muster enough regulatory support to bring the deal to a close. I believed, at best, the deal would progress smoothly throughout 2021 before it was dealt a killing blow by Chinese regulators in early 2022.

It’s been anything but smooth.

At the time the deal was announced, the Trump administration was on a crusade to hurt Chinese firms by denying access to critical U.S. semiconductor tech. Those efforts only intensified in the administration’s final days, and the Biden administration has done little to ease tensions in this arena.

This pressure reinforced my belief that Chinese regulators would never sign off on the deal despite fervent claims to the contrary. Under the wing of U.S.-based Nvidia, it’s up for debate whether the U.S. government could restrict access to Arm’s intellectual property.

In reality, the deal never got that far. Nvidia now faces regulatory roadblocks in the United Kingdom, European Union, and most recently the U.S.

You'd be forgiven if you’d forgotten the specifics of the deal. Fifteen months is a long time in the tech space — even when there isn’t a pandemic warping our sense of time.

To recap: In September 2020 SoftBank announced it’d agreed to sell Arm Holdings to Nvidia in a deal valued at $40 billion. At first glance, it seemed like the perfect opportunity for Nvidia to fill a CPU-sized gap in its portfolio. Despite announcing an Arm-based CPU a few months later, the chipmaker’s plans for Arm are a bit more nuanced.

Under the proposed deal, Arm would continue to operate out of its headquarters in Cambridge, England. It would also retain its brand, open licensing, and customer neutrality.

However, Nvidia’s aspirations aren't simply to be Arm's shepherd. In fact, the real reason Nvidia pursued Arm had nothing to do with controlling the world’s most popular compute architecture and has everything to do with licensing its technology.

Why make the chips when you can license the tech and cut the foundry overhead altogether?

And thanks to the $6.9 billion acquisition of Mellanox in 2019, Nvidia is bursting at the seams with intellectual property ripe for integration into custom silicon. The chipmaker’s portfolio spans graphics, artificial intelligence, data, and networking acceleration.

The inclusion of Nvidia’s vast semiconductor tech portfolio opens the door to entirely novel data center architectures tailored to specific workloads and use cases, CEO Jensen Huang touted in a press conference following the announcement.

With that said, I’m not entirely sure why Nvidia really needs Arm to license its tech.

Today, the deal, like so many things over the past two years, feels more like a fever dream than reality.

Thanks to mounting regulatory pressure across the board, Nvidia’s bid to wrestle away Arm from SoftBank may be remembered as little more than that.

While I’d always assumed there’d be resistance in China, I can’t say I was all that surprised when hours after the announcement, the British government started asking questions. In early 2021, the British government made good on that promise, launching an antitrust investigation. Last April, it doubled down, announcing it would intervene in the deal on national security grounds.

And while both Nvidia and Arm CEOs Jensen Haung and Simon Segars have attempted on multiple occasions to assuage regulators, their pleas appear to have fallen on deaf ears.

Nvidia was dealt another blow last October when the European Union announced its own investigation, citing concerns the acquisition could harm Arm customers, increase pricing, and hamper innovation in the semiconductor space.

But for me, the last straw came in late December when the U.S. Federal Trade Commission sued to block the merger.

All of the wishful thinking in the world isn’t going to change the fact regulators don’t want to see this deal close. I simply can’t see Nvidia making the concessions necessary to change anyone’s mind.

And so I find myself among those calling on Nvidia to cut its losses.

In a blog post late last year, GlobalData analysts David Bicknell and Lil Read summed it up well, though at the time I wasn't yet convinced of their conclusion. “With proceedings likely to extend into late 2022 at the earliest, Nvidia should just abandon the deal,” the two wrote. “We think it’s time for Nvidia to move on, and for SoftBank to return Arm to where it found it — the stock market.”

And I quite frankly couldn’t agree more. Any company as embedded in our day-to-day as Arm should be free of adulteration at the hands of an unscrupulous parent no matter how noble their stated intentions may be.