Competition watchdog recommends probe into Arm deal

The Competition and Markets Authority (CMA) has recommended an in-depth probe into Nvidia’s planned takeover of chip designer Arm.

The competition watchdog said that the merged business would have a “significant degree of control over key technologies for a range of sectors,” including artificial intelligence.

The watchdog also said it “found significant competition concerns associated with the merged business’ ability and incentive to harm the competitiveness of NVIDIA’s rivals” and to restrict “access to Arm’s CPU IP” and “impair interoperability between related products.”

The news comes after the CMA officially opened an investigation in April into the planned $40 billion acquisition of the Cambridge-based company. Nvidia first announced the acquisition, set to take place in collaboration with Japanese conglomerate Softbank, in November 2020.

Arm, which has 6,500 employees worldwide, designs processors which are widely used in consumer electronic devices such as smartphone tablets, but also some desktops and super computers.

Arm claims that 70 per cent of the world’s population engages with Arm-based technology.
The deal would currently be worth around $54.3 billion based on Nvidia’s share price.

The regulatory pressures on Nvidia are not just UK-based; in June, it was found that Nvidia’s Arm acquisition was also facing regulatory opposition in China.

Nvidia’s acquisition is not the only controversial demonstration of foreign interest in the UK chip industry; Newport Wafer Fab, the UK’s largest chip producer, was bought by Chinese owned company Nexperia in July.

The UK government has also recently opened a formal investigation into the proposed £2.6 billion takeover of UK defence manufacturer Ultra Electronics by US private equity firm Cobham, which controls some of its competitors.

“We are 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, chief executive of the CMA. “This could end up with consumers missing out on new products, or prices going up.”

Coscelli added: “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 datacentre 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.”

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