The United Kingdom competition regulator wants to block the deal that would see Nvidia acquire Arm.
Semiconductor manufacturer Nvidia is reportedly fighting back as UK’s Competition and Markets Authority seeks to block the company’s $40 billion acquisition of Arm. Arm is currently owned by Japanese tech giant SoftBank, and the two have agreed on a deal.
However, regulators in the United States, the United Kingdom, Europe and China are currently scrutinizing the deal. The regulators are concerned that the Arm acquisition by Nvidia will reduce the competition in the semiconductor industry.
Despite the regulatory challenges, Nvidia and Arm are not giving up on the deal. According to the companies, the regulators are romanticising Arm’s history, ignoring the company’s current financial position and also overstating its current market power.
Arm is considered to be one of the most successful tech companies in the United Kingdom. Its energy-efficient chip designs are used in 95% of the world’s smartphones and 95% of the chips currently designed in China.
The regulators are concerned that Nvidia acquiring Arm could restrict access to Arm’s “neutral” semiconductor designs. This could ultimately lead to higher prices, fewer choices and reduced innovation in the semiconductor industry.
However, Nvidia believes that the deal would lead to further innovation in the sector and Arm will benefit from the increased investment. Margrethe Vestager, the European Commission’s executive vice president, said;
“Whilst Arm and Nvidia do not directly compete, Arm’s IP is an important input in products competing with those of Nvidia, for example in data centers, automotive and in the internet of things.”
She added that their analysis indicates that the acquisition of Arm by Nvidia could lead to restricted or degraded access to Arm’s IP, which could affect the broader market. However, Nvidia and Arm don’t believe that is the case. The companies said;
“The theory does not hold up to scrutiny. Trying to foreclose Arm licensees would immediately reduce Arm’s licensing revenue, immediately damaging Nvidia’s investment. No economically rational, a publicly-traded entity would embrace such a self-defeating strategy.”
The deal was agreed upon in September 2020 and given 18 months from then to be completed.