Arm’s $ 40 billion acquisition of Nvidia warrants an in-depth competitors investigation, the UK regulator says

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Nvidia headquarters in Santa Clara, Calif. On Tuesday, February 23, 2021.

David Paul Morris | Bloomberg | Getty Images

The $ 40 billion takeover of the British chip designer Arm by Nvidia should be subjected to an in-depth investigation, the British competition authority announced on Friday.

The competition and market regulators announced that they had sent the British digital foreign minister Oliver Dowden a summary of their initial findings on the planned takeover.

In the report, the watchdog said it identified “significant competition concerns” with the deal. The CMA fears that Nvidia could impede competition by restricting access to Arm’s intellectual property and “affecting interoperability between related products.”

Such strategies could lead to a possible “significant reduction in competition” in several markets, including the supply of data centers, car software and game consoles, the regulator said.

Nvidia has repeatedly insisted that Arm’s business model will not be changed.

“We look forward to the opportunity to respond to the CMA’s initial views and address any government concerns,” an Nvidia spokesman told CNBC. “We remain confident that this transaction will benefit Arm, its licensees, the competition and the UK.”

It comes after the UK government interfered with the Nvidia arm deal on national security grounds. Dowden had asked the CMA to prepare a report on the impact of Nvidia’s arm purchase.

The government said it will decide in due course whether to initiate a Phase II investigation.

“We have received the Phase 1 report from the CMA and the Digital Secretary will decide in due course whether to proceed with the next phase of the investigation,” said a government spokesman.

What is poor

Arm is a Cambridge, England based company specializing in semiconductor architecture designs. The company’s chip blueprints are licensed to chip manufacturers around the world. It is being sold to Nvidia by SoftBank for $ 40 billion.

Big tech companies like Qualcomm, Microsoft and Google have complained that the deal will hurt competition in the semiconductor industry.

This week, Nvidia admitted that the proposed acquisition is unlikely to close within its original 18-month timeframe.

UK Prime Minister Boris Johnson is under pressure from his own party’s legislature to step in to prevent promising domestic tech companies from being taken over by foreign firms.

Chinese-owned Nexperia recently agreed to acquire the UK’s largest chip manufacturing facility. Johnson then ordered national security adviser Stephen Lovegrove to investigate the deal. A decision could be announced in the coming days.

– CNBC’s Sam Shead contributed to this report.

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