Arm takeover looks increasingly out of reach for Nvidia

17 Nov 2021

Image: © Ralf/Stock.adobe.com

The UK’s in-depth investigation into Nvidia’s proposed Arm acquisition is ‘another nail in the coffin’ for the tech deal.

It has been more than a year since Nvidia first announced its plans to acquire UK chip maker Arm from SoftBank, and the US tech giant has now hit another roadblock.

Both the UK and EU have raised competition concerns over the deal, with the EU launching a full-blown antitrust probe into the transaction last month.

Future Human

Yesterday (16 November), the UK followed suit and ordered a 24-week investigation to be carried out by the country’s Competition and Markets Authority (CMA).

UK digital secretary Nadine Dorries instructed the CMA to carry out the in-depth phase-two investigation, after an initial probe by the competition watchdog found further scrutiny was needed before the deal could go ahead. In August, the CMA raised concerns that acquiring Arm could inhibit Nvidia’s rivals from accessing key technologies and recommended an in-depth investigation.

In the phase-one report published yesterday, the CMA found that the proposed transaction raises the possibility of “substantial lessening of competition” across four key markets – data centres, internet of things, the automotive sector and gaming applications.

Phase two will continue to evaluate the Arm acquisition in light of its potential impact on competition and what CMA chief executive Andrea Coscelli called the “stifling of innovation”. It will also investigate the deal’s national security implications.

“Arm has a unique place in the global technology supply chain, and we must make sure the implications of this transaction are fully considered,” said Dorries.

“The government’s commitment to our thriving tech sector is unwavering and we welcome foreign investment, but it is right that we fully consider the implications of this transaction.”

The CMA will now have 24 weeks to conduct the probe and deliver the final report to Dorries.

‘Another nail in the coffin’

Analysts from data analytics platform GlobalData suggested that with the latest probe into the proposed takeover, Nvidia should begin to consider a future beyond Arm.

“This latest government probe is another nail in the coffin for the proposed merger between Nvidia and Arm,” said David Bicknell and Dr Lil Read, analysts on the thematic research team at GlobalData. “With proceedings likely to extend into late 2022 at the earliest, Nvidia should just abandon the deal and focus on its future away from Arm.

“It is unlikely it will want the continued uncertainty of a bid that is going nowhere. We think it is time for Nvidia to move on, and for SoftBank to return Arm to where it found it – the stock market.”

Bicknell and Read proposed that Nvidia should focus on the metaverse for its future success. “Nvidia is already targeting the metaverse as a key pillar of its future – a wise decision as GlobalData believes it will be the next big technology megatheme.”

The metaverse has been a buzzword in the tech world recently, with Facebook (now Meta) CEO Mark Zuckerberg setting his eyes on a virtual reality world – with an expected spending of $10bn on AR and VR in 2021 alone and billions more in the coming years.

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Vish Gain is a journalist with Silicon Republic

editorial@siliconrepublic.com