Nvidia’s Arm deal raises serious competition concerns, says UK agency

23 Aug 2021

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The UK’s competition watchdog said the Arm acquisition ‘could create real problems for Nvidia’s rivals’, potentially limiting technological innovation.

The Competition and Markets Authority (CMA) in the UK has said that an in-depth investigation into Nvidia’s $40bn acquisition of Arm is needed before the deal can go ahead.

The competition watchdog began looking at the acquisition in April, after the UK’s Department for Digital, Culture, Media and Sport raised concerns on the grounds of national security.

The CMA was obliged to provide a report regarding market competition as well as a summary of representations from third parties that could relate to national security in this case. It concluded that Nvidia’s purchase of Arm raises “significant competition concerns” and so the deal requires further investigation.

The Department for Digital, Culture, Media and Sport will use this information to decide whether the merger should be subject to further investigation from the CMA. There is no set date for this decision to be made.

“We’re concerned that Nvidia controlling Arm could create real problems for Nvidia’s rivals by limiting their access to key technologies, and ultimately stifling innovation across a number of important and growing markets. This could end up with consumers missing out on new products, or prices going up,” said Andrea Coscelli, chief executive of the CMA.

“The chip technology industry is worth billions and is vital to products that businesses and consumers rely on every day. This includes the critical data processing and data centre technology that supports digital businesses across the economy, and the future development of artificial intelligence technologies that will be important to growth industries like robotics and self-driving cars.”

The report also stated that Nvidia had offered to implement measures that would regulate the conduct of the business, but the CMA stated this would not alleviate its concerns.

UK chipmaker Arm was founded in 1990 and has a long history of designing technology used by Apple, Samsung and Qualcomm. In 2016, Japan’s SoftBank purchased Arm for approximately $32bn but decided to sell the firm to US chip giant Nvidia in 2020.

Concerns around the deal were widespread from the get-go, as Arm co-founder Hermann Hauser said it would give Nvidia “an opportunity to become the quasi monopoly supplier of microprocessors to the world”.

Nvidia, which achieved record revenue last quarter, recently stated that it expects the deal to go through.

Nvidia CFO Colette Kress said last week: “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.”

Sam Cox was a journalist at Silicon Republic covering sci-tech news