It looks like Nvidia's purchase of semiconductor and software design company Arm will not be going through after all.

Bloomberg News is reporting that the $40 billion proposed acquisition is falling apart, a collapse driven by regulatory scrutiny over the deal. Nvidia is purportedly set to lose $1.25 billion on the failed business move. 

The Arm acquisition was meant to help drive Nvidia's GPU-focused operation into the world of CPU manufacturing. It had originally promised to maintain Arm's open-source licensing model and expand research and development operations in Arm's UK headquarters. Regulators were still not convinced.

If Nvidia wants to continue its development push into more computer hardware manufacturing, it will have to do so without the aid of one of the world's most prolific chipmakers.