Gartner semiconductor analyst Alan Priestley said that the deal is facing a growing number of regulatory probes around the world, Priestley said, pointing to concerns in the UK, EU, US and China.
The deal was set to be completed by March 2022 but Nvidia CEO Jensen Huang admitted in August that it would probably go beyond that date.
For those who came in late, ARM was spun out of an early computing company called Acorn Computers in 1990. The company's energy-efficient chip designs are used in 95 percent of the world's smartphones and 95 percent of the chips designed in China.
The company, bought by Japan's SoftBank in 2016 for £24 billion ($32 billion), licenses its chip designs to more than 500 companies who use them to make their own semiconductors.
However, critics are concerned that the merger with Nvidia could restrict access to ARM's "neutral" semiconductor designs and may lead to higher prices, less choice and reduced innovation in the industry. Nvidia insists that the deal will lead to more innovation and that ARM will benefit from increased investment.
Rival Qualcomm has said that Nvidia could limit the supply of ARM's technology to its competitors or raise prices. Google and Microsoft have raised the same concerns with regulators, according to Bloomberg.
Yesterday the Federal Trade Commission sued to block the deal on antitrust grounds.
"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.
It added: "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."
In November, the UK government announced that it wants a full-blown investigation into the ARM acquisition. ARM is headquartered in Cambridge and widely seen as the jewel in the crown of the British tech sector.
Digital and Culture Secretary Nadine Dorries ordered a "phase 2" probe into the deal. The probe — to be carried out by the Competition and Markets Authority over a 24 week period — will investigate antitrust concerns and national security issues.
Meanwhile, the European Commission, the executive arm of the EU, launched its own in-depth investigation into the deal in October.
Margrethe Vestager, the European Commission's executive vice president, said in a statement: "Our analysis shows that the acquisition of Arm by Nvidia could lead to restricted or degraded access to Arm's IP, with distortive effects in many markets where semiconductors are used."
In China, the state-backed Global Times newspaper said the deal was "disturbing" and urged regulators to treat it with caution.
Analysts and investors have been expecting the deal to be blocked for a while. Tech investor Ian Hogarth thinks the deal has a less than 25 percent chance of going through following the FTC's decision to sue.
Gartner's Priestley said SoftBank would likely try and list ARM on the stock market if the Nvidia deal falls through. Priestley said he wasn't sure how well ARM would fare on its own.
"The issue ARM has, and this is the issue SoftBank faced, is how it drives its revenue. IP licensing is great but it's really hard to squeeze it."