Announced in September last year, Nvidia’s $40 billion purchase of chip maker ARM was one of the biggest recent deals in the tech world. As such, the acquisition could end up in the crosshairs of UK regulators, who have recommended opening an investigation into the possibility that the merger between the two companies could hurt competition and access to technologies in the semiconductor industry.
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The assessment is by the Competition and Markets Authority, which sent a summary of its initial findings about the deal to Oliver Downden, secretary of state for culture, digital, media and sports. The report points out significant concerns related to the competitiveness of the market, if the purchase is authorized, especially regarding the possibility of Nvidia preventing or hindering the access of competitors to ARM products.
At the heart of the matter are the chipmaker’s intellectual properties, which are essential to much of the semiconductor industry. In addition, the regulators’ notes are related to possible attempts by Nvidia to reduce device interoperability, in actions that could reduce the supply of chips and, consequently, devices. The vehicle, game and data center markets would be hardest hit by such changes, says the official.
The recommendation is more bad news for Nvidia, as the report presented now comes from a request by Dowden himself, which indicates that the investigation should effectively be opened. In early August, the secretaries of state asked for regulatory review pointing out that the purchase of ARM could pose risks to national security, although specific concerns have not been revealed by the government.
A possible Reviews also responds to requests from other industry players, such as Qualcomm, Google and Microsoft, who have expressed fears about access to technologies or increase in license fees. In addition, there is pressure within the British legislature itself, with lawmakers citing the sale of ARM, which was founded in England, as a mark of attention for Prime Minister Boris Johnson in favor of legislation to prevent the acquisition of local companies by foreigners .
On the other hand, it’s worth noting that, even before Nvidia’s acquisition, ARM was no longer an independent company — the $40 billion deal was done by GPU maker and Japan’s SoftBank. In addition, at the time of the announcement, the buyer stated that it would not change its acquiree’s structures and businesses, maintaining existing agreements and licensing conditions.
In a statement, Nvidia reaffirmed these conditions and said it was available to the British government for clarification on the purchase. The company said it believes that the purchase will benefit both Arm, its partners and collaborators, as well as for the United Kingdom itself, ensuring the entry of investments and greater presence in the global market for this, which is already one of the main technology suppliers in the segment. .
Still, the idea doesn’t sound positive, coming in the same week that Nvidia warned its investors that the ARM purchase is not expected to be completed within the 18-month timeframe that was announced in August of last year. Meanwhile, analysts point out that the investigation should generate reservations for the business, which is not at risk of being disapproved, even if the guarantee comes with some restrictions.
In a statement, Secretary Dowden’s office said it had received the report, which would be thoroughly evaluated. A final decision on whether or not to open an investigation is expected below, but a deadline for doing so has not been announced.