EU begins antitrust probe into Nvidia’s acquisition of Arm

28 Oct 2021

Image: © Sundry Photography/Stock.adobe.com

The European Commission will make a decision by 15 March to either clear or block Nvidia’s takeover of Arm.

Nvidia’s plan to buy UK-based chip maker Arm has faced another roadblock, with the European Commission launching an in-depth antitrust investigation into the $54bn deal yesterday (27 October).

This comes two months after the UK’s Competition and Markets Authority (CMA) recommended a similar investigation after it found that the deal could potentially limit competition and innovation in the chip making sector.

Future Human

The European Commission said in a statement that it was worried the merger would hike prices and restrict access for Nvidia’s rivals in terms of Arm’s intellectual property (IP).

“While Arm and Nvidia do not directly compete, Arm’s IP is an important input in products competing with those of Nvidia, for example in data centres, automotive, and internet of things,” said executive vice-president Margrethe Vestager, who is responsible for competition policy.

“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.”

‘Confident’ deal will go through

The prospect of an EU investigation was first reported in August and was expected to begin after Nvidia formally notified the Commission of its intention to acquire Arm.

Despite competition concerns being raised, Nvidia has been confident the deal will go through.

“Although some Arm licensees have expressed concerns or objected to the transaction, and discussions with regulators are taking longer than initially thought, we are confident in the deal and that regulators should recognise the benefits of the acquisition to Arm, its licensees and the industry,” Nvidia CFO Colette Kress said earlier this year.

The EU and UK aren’t the only ones worried about the deal. Arm co-founder Hermann Hauser also expressed concerns, saying it would give the California company “an opportunity to become the quasi-monopoly supplier of microprocessors to the world”.

The Cambridge-based chip maker is currently owned by Japan’s SoftBank, which agreed to sell to Nvidia in 2020.

Nvidia had issued “behavioural remedies” to the Commission, according to Reuters, and said it would ensure Arm’s neutrality after the acquisition, a concern raised by current Arm customers Qualcomm, Samsung and Apple. The Commission found the concessions to be inadequate.

“Our investigation aims to ensure that companies active in Europe continue having effective access to the technology that is necessary to produce state-of-the-art semiconductor products at competitive prices,” added Vestager.

The Commission now has 90 working days to make a decision, and the deal will be either cleared or blocked by 15 March 2022.

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Vish Gain is a journalist with Silicon Republic

editorial@siliconrepublic.com