Nvidia’s $40bn acquisition of Arm faces investigation

4 Feb 2021

Image: © JHVEPhoto/Stock.adobe.com

The $40bn deal could face a number of roadblocks, with competition investigations in the UK and Europe.

Last month, the UK’s competition watchdog announced plans to investigate Nvidia’s acquisition of chip maker Arm.

The EU is now set to join the UK in opening an in-depth competition investigation, according to the Financial Times citing a person with knowledge of the situation.

The deal, announced in September 2020, is worth $40bn and would see Nvidia buy Arm from SoftBank Group.

In a statement at the time, Nvidia said that the transaction would combine its own AI computing platform with Arm’s ecosystem to create a stronger company for the age of AI, accelerating innovation while expanding into large, high-growth markets.

However, the announcement has raised concerns within the industry and with antitrust officials. According to Reuters at the time of the deal, Geoff Blaber, vice-president of research for the Americas with CCS Insights, said the acquisition would “rightly face huge opposition” from Arm’s customers.

“An acquisition by Nvidia would be detrimental to Arm and its ecosystem,” Blaber said. “Independence is critical to the ongoing success of Arm and once that is compromised, its value will start to erode.”

These concerns were echoed by Arm co-founder Hermann Hauser, who claimed the deal would give Nvidia “an opportunity to become the quasi monopoly supplier of microprocessors to the world”.

As a semiconductor company, Arm’s designs are widely used in the chip industry. Some of its biggest customers include Apple, Samsung and Qualcomm.

More roadblocks

In December 2020, The Telegraph reported that US competition regulators were also looking into the deal, requesting additional documents from Nvidia.

Then in early January, the Competition and Markets Authority in the UK called for interested parties to submit views on the controversial deal before the launch of a formal investigation later this year.

Another potential challenge could be from China, with Chinese companies such as Huawei already reportedly lobbying Beijing to block the deal.

While paperwork has yet to be formally filed in Brussels, the Financial Times reports that officials in both the EU and the UK said that “serious scrutiny” of the deal was warranted.

In response to the Financial Times report, Nvidia chief executive Jensen Huang rejected the competition concerns and said the company would “maintain Arm’s open licensing model”.

Jenny Darmody is the editor of Silicon Republic