Nvidia is reportedly preparing to abandon its $40 billion acquisition of British chip designer Arm amid anti-trust probes in the US and Europe.

Bloomberg News reported on Tuesday, citing sources, that the US-based chipmaker has told partners “it’s not expecting the (Arm) deal to be finalized”.

“We continue to hold the views expressed in detail in our latest regulatory filings — that this transaction provides an opportunity to accelerate Arm and boost competition and innovation,” an Nvidia spokesperson told CNBC.

The Federal Trade Commission (FTC) last month sued to block Nvidia’s $40 billion acquisition of Arm from Softbank on antitrust grounds.

The deal faced scrutiny from regulators since it was announced last year.

“The proposed vertical deal would give one of the largest chip companies control over the computing technology and designs that rival firms rely on to develop their own competing chips,” the FTC said in an announcement.

Arm is a core supplier of architecture technology to most semiconductor companies. Its Arm instruction set is at the core of nearly all mobile processors powering smartphones, including those made by Apple and Android devices that use Qualcomm chips.

But the company’s role in the chip industry was historical as a neutral supplier, raising concerns that Nvidia could cut off competitors from essential Arm technology.

Some of Nvidia’s processors also use Arm-designed cores and its Arm architecture, although the company is best known for graphics processors, which use different architecture.

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“The complaint alleges that the proposed merger would give Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice,” the FTC said in its statement.

FTC Chair Lina Khan, who was appointed by President Joe Biden to lead the agency shortly after her confirmation to the agency earlier this year, has signaled an interest in more robust antitrust enforcement.

Regulators in the UK and the EU declined to approve the transaction in Phase 1 of their reviews on competition concerns.

The European Commission in October opened an in-depth investigation to assess the $40 billion acquisition of Arm by Nvidia.