Competition watchdog to investigate Nvidia acquisition of Arm

The UK Competition and Markets Authority (CMA) is inviting initial views ahead of the acquisition of Cambridge-based Arm by US graphics chip designer Nvidia. The regulator will consider the possible effect of the deal on competition in the UK.

The CMA is inviting third parties to submit their initial views on the acquisition’s impact on competition, ahead of a formal investigation which will begin later this year.

In 2016, the influential semiconductor and software designer was acquired by Japanese conglomerate SoftBank Group for $32bn. In September last year, it was announced that Nvidia would buy a 90 per cent stake in Arm from SoftBank for $40bn, with the latter acquiring a 10 per cent share in Nvidia. Nvidia CEO Jensen Huang said that Arm and its IP would continue to be registered in the UK and that it would retain its open licensing model and neutrality.

Arm’s designs the industry-standard chip architecture found in all categories of computing devices, for companies including Samsung, Apple, Microsoft, Huawei and Sony.

The latest deal has attracted more criticism than SoftBank’s acquisition due to Nvidia’s significant presence in the semiconductor industry. This could present a threat to Arm’s longstanding reputation as an open and neutral supplier. Arm co-founder Hermann Hauser criticised the deal last year, telling Reuters that it was a “disaster for Cambridge, the UK and Europe” and should be blocked by regulators”.

More than 2,000 business leaders put their names to an open letter calling on the government to “Save Arm” by ensuring that there are legally binding agreements to protect UK jobs and ensure continued neutrality, such that UK companies are guaranteed unfettered access to British microprocessor technology, or alternatively to take Arm into public ownership for the sake of national economic security.

The regulator will investigate potential impacts of the deal on competition, such as whether Arm may raise prices or limit its IP licensing services to Nvidia’s rivals. The CMA’s remit is limited to impact on competition, so it will not consider other fears associated with the deal, such as on local employment.

“The chip technology industry is worth billions and critical to many of the products that we use most in our everyday lives,” said Andrea Coscelli, chief executive of the CMA. “We will work closely with other competition authorities around the world to carefully consider the impact of the deal and ensure that it doesn’t ultimately result in consumers facing more expensive or lower-quality products.”

Further opportunities for parties to submit views on the deal will come as the CMA opens its formal Phase 1 investigation.

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