Nvidia’s Arm acquisition faces EU, UK regulatory probe

The EU and UK will probe Nvidia’s $40 billion acquisition of Arm.



Nvidia’s $40 billion Arm acquisition has led the EU and the UK to launch a competition investigation into the deal on concerns floated by rival chip makers and users.

The Cambridge, UK-based Arm chips are ubiquitous in the world’s cellphones. It owns and licenses a set of instructions that almost all smartphone companies lease and base their chips on.
Regulators in both Brussels and the UK said that the deal needed serious scrutiny, given the popularity of Arm’s designs.

“This deal will be thoroughly investigated [ . . . ] and scrutiny may lead all the way to a prohibition,” said one person with direct knowledge of the situation.

Nvidia Headquarters Arm acquisition

Nvidia’s Endeavor Headquarters. (Photo: Connie Zhou)

The current terms of the deal, which is scheduled to close by March 2022, will see Nvidia pay Softbank $21.5 billion in stock and $12 billion in cash. In addition, if Arm meets certain financial targets, Nvidia agreed to pay Softbank up to $5 billion more. The sale is subject to regulatory approval from China, the EU, the UK and the US.

Arm acquisition to disadvantage others? 

The current investigation by the UK and EU is still at a preliminary stage. The UK Competition and Markets Authority has invited market players to submit their views. A proper probe will take some months to complete. Paperwork has yet to be formally filed in Brussels.

Arm’s designs are widely used in the chip industry. Phones produced by Apple, Huawei, Samsung, and Qualcomm all use Arm-based chips, which are simpler than traditional processing units but draw less power.

The companies have voiced concerns that once Nvidia takes over Arm, then all competing entities in the market, including cellphone, smart device makers, and anyone who uses the chip tech of Arm, will be placed at a disadvantage and will be at the mercy of Nvidia’s largesse.

At the time of purchase of Arm in September, Nvidia vowed it would retain Arm’s previous business model, under which it treated all of its licensees equally. Jensen Huang, Nvidia’s chief executive, said in a letter to the Financial Times: “I can unequivocally state that Nvidia will maintain Arm’s open licensing model. We have no intention to ‘throttle’ or ‘deny’ Arm’s supply to any customer.”

But this has not reassured the rivals and some have actively lobbied with the regulatory authorities to interfere in the matter.

“The overarching worry is the loss of neutrality of Arm. At the moment, the company is very neutral in its packages with its customers. But the worry is that in the medium and long term, Nvidia will use Arm acquisition to disadvantage other companies and pump up its own technology,” said one concerned rival.

There are fears that the deal may still go through with some minor concessions given not the insistence of the probe authorities. Officials also fear that regulators will be powerless to force Arm to remain neutral in future. “There is a good chance of the deal being blocked because there is no real way to preserve neutrality. There will be irresistible economic incentives for Nvidia to combine elements with Arm. Otherwise, why are they paying $40bn?” said one person close to the situation.

With cybersecurity a growing concern, the UK government is looking at whether the deal will have any national security implications. Oliver Dowden, the digital, culture, media and sport secretary, has been pressured to intervene and look deeper into the deal. “This transaction is great for innovation and market competition. We’re confident that the regulators will see the benefits to the tech ecosystem.” 

Subscribe to the nation’s fastest-growing CEO magazine to read about the latest tech news and updates.

Christy Gren
Christy Gren is an Industry Specialist Reporter at Industry Leaders Magazine she enjoys writing about Unicorns, Silicon Valley, Startups, Business Leaders and Innovators. Her articles provide an insight about the Power Players in the field of Technology, Auto, Manufacturing, and F&B.

Recent Posts

Flagship Pioneering, investor in Moderna raises $3.4 billion funds

Flagship Pioneering, investor in Moderna raises $3.4 billion funds

Flagship Pioneering, the bioplatform company, and the venture capital investor in Moderna, today announced that it had raised additional funding of $2.23 billion, which brings its
14 hours ago
United to recall furloughed employees as travel recovers

United to recall furloughed employees as travel recovers

The fading of the pandemic and the rollout of vaccines has brought in some good cheer for the floundering air travel industry. More countries have opened up for business and are al
1 day ago
UK’s Sanne agrees to consider Cinven bid

UK’s Sanne agrees to consider Cinven bid

Sanne, a UK fund administration business that provides alternative asset and corporate services, has agreed to hold talks with private equity firm Cinven over a potential £1.4bn t
2 days ago
Global stocks rise as investors ignore inflations indicators

Global stocks rise as investors ignore inflations indicators

Global stocks rose to an all-time high, with investor showing confidence in a strong economic recovery from coronavirus and the vaccine effect, but the market is still a bit cautio
2 days ago
UK watchdog whacks Amazon with probe for unfair data collection practices

UK watchdog whacks Amazon with probe for unfair data collection practices

The Competition and Markets Authority will focus on whether Amazon, Inc. favors merchants that use its delivery services.
4 days ago
Altice buys 12 percent stake in BT worth £2 billion

Altice buys 12 percent stake in BT worth £2 billion

Altice said it did not intend to make a bid for the British Telecoms company, though the takeover code also does not allow it to make an unsolicited buyout offer for six months wit
4 days ago