UK competition watchdog sounds alarm over Arm acquisition

Arm is among the most successful and influential British companies. It designs the industry-standard chip architecture found in all categories of computing devices, from supercomputers to microcontrollers, and is considered the world leader in processors for mobile devices.

In 2016, Arm was acquired by SoftBank under a $32bn (£24bn) deal. In September 2020, Nvidia announced it would buy a 90 per cent stake in Arm for $40bn (£31bn), leaving SoftBank with the remaining 10 per cent share, pending regulatory approval. The change of owner is controversial due to Nvidia’s significant presence in the semiconductor industry, which could compromise Arm’s unique business model of open licensing and partner neutrality.

The CMA has warned that the deal may restrict Nvidia’s rivals’ access to Arm’s almost-omnipresent technology. It said that the proposed acquisition raises serious competition concerns across a number of markets including data centres, gaming, and autonomous vehicles.

The regulator recommended an in-depth investigation into the proposed deal.

“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,” said Andrea Coscelli, CEO of the CMA. “This could end up with consumers missing out on new products or prices going up. 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 AI technologies that will be important to growth industries like robotics and self-driving cars.”

Nvidia has said it will keep Arm based in the UK and offered a measure to regulate Arm’s ongoing behaviour, but the CMA said that this would not alleviate its concerns.

It has reported its concerns to the Department for Digital, Culture, Media, and Sport, where a decision on next steps will be made. A department spokesperson said: “We have received the CMA’s phase one report and the digital secretary will make a decision on whether to proceed to the next phase of the investigation in due course.”

An Nvidia spokesperson said: “We look forward to the opportunity to address the CMA’s initial views and resolve any concerns the Government may have. We remain confident that this transaction will be beneficial to Arm, its licensees, competition, and the UK.”

The government has also been separately been considering the national security implications of the deal, and the CMA confirmed it had also provided ministers with a summary of representations from third parties on that issue.

Meanwhile, there is controversy over the proposed acquisition of the UK’s largest semiconductor fab, Newport Wafer Fab, and two of the country’s largest defence firms being acquired by foreign or foreign-backed owners. Semiconductors are, along with conventional defence technologies, considered a strategically important technology for national security.