Nvidia takeover of chip designer Arm investigated

Nvidia takeover of chip designer Arm investigated

The Competition and Markets Authority (CMA) announced an inquiry into the $40 billion (£29.5 billion) purchase of UK computer chip designer Arm Holdings.

U.S. graphics chip specialist Nvidia decided to acquire the company from Japan’s Softbank Group in September of last year.

Britain’s antitrust agency has been scrutinising the sale, with the two firms expecting action.

Arm technology is at the core of most smartphones and watches.

Its designs are based on processors produced by Apple, Samsung, Sony and Huawei.

The CMA invited “interested third parties” to comment on the possible effect of the merger on markets in the United Kingdom.

The formal investigation will begin later this year.

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The CMA argued that it is likely to wonder whether, after the takeover, Arm has an opportunity to withdraw, increase costs or reduce the quality of its intellectual property licencing services to rivals in Nvidia.

“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 Officer of 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.”

Until now, the European Commission has been responsible for most of the major and complex antitrust cases involving the United Kingdom.

The CMA took up these duties after the departure of the United Kingdom from the European Union.

Its regulatory expertise is to assess the potential effect of a merger on competition.

Last year, more than 2,000 corporate leaders signed an open letter calling on the Prime Minister to avert the merger, saying that UK employment and power could be destroyed.

Nvidia has vowed to keep the UK-based company, recruit more employees, and retain Arm’s name.

It said that the agreement would create “the premier computing company for the age of artificial intelligence”

And the firm added: “We believe the approval process will take about 18 months from when we signed the deal. The regulatory process is confidential and we won’t be providing comment on milestones along the way.”

When news of the selling of what is potentially the most important British technology company in the last 30 years broke, there was public dismay at demands for the government to intervene.

But that was when Japan’s SoftBank purchased Arm in 2016.

The 2020 transaction that saw SoftBank sell Arm to Nvidia was greeted in the UK with something of a resigned shrug-apart from the fierce resistance of the Cambridge-based business co-founder Hermann Hauser.

After all, what control will the British regulators have over a deal between a Japanese seller and an American buyer?

However, the CMA feels the need to step in, perhaps to put down a marker now that the UK is outside the EU and is able to flex its regulatory muscles.

However, this is so much the first move and does not lead anywhere.

Nvidia may be more concerned with other regulators around the world who might listen to their rivals’ concerns that, by taking over Arm’s neutral licencing platform, it will stifle competition in the chip industry.

China, in particular, has already made it known that it is not satisfied with a contract that provides so much leverage to an American giant at a time when the US has tried to deny Chinese companies access to chip technology.