Regulators investigate Nvidia’s £29bn acquisition of British chip designer Arm over fears it could stifle innovation
The US takeover of British chip designer Arm was dealt another blow yesterday when the British competition watchdog warned it could stifle innovation.
Nvidia is trying to buy Cambridge for £29 billion from Japan’s Softbank, which it has owned since 2016.
But the Competition and Markets Authority (CMA) is calling for the deal to be subject to a full investigation over concerns it could lead to less competition and higher prices.
Acquisition target: Nvidia seeks to buy British chip designer Arm for £29 billion from Japan’s Softbank, which it has owned since 2016
If approved, the CMA said Nvidia would have “the ability and incentive” to harm rivals by restricting their access to Arm’s technology.
Arm is currently licensing its groundbreaking microchip designs to manufacturers around the world, a model it has dubbed “the Switzerland of semiconductors.”
Nvidia offered to give guarantees that it would continue to allow this, but they were rejected by the CMA.
Andrea Coscelli, the regulator’s director, said: “We are concerned that Nvidia’s control of Arm could cause real problems for Nvidia’s rivals by limiting their access to key technologies and ultimately stifling innovation in some important and growing markets.
“This can lead to consumers missing out on new products or causing prices to rise. 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 data center technology that powers digital businesses across the economy, and the future development of artificial intelligence technologies that will be important to growth industries such as robotics and self-driving cars.”
The CMA’s findings emerged from a “phase one” investigation of the acquisition, with the regulator now recommending that a more in-depth “phase two” probe should follow.
It’s up to Oliver Dowden, the culture secretary, to decide whether that goes ahead. A spokesperson for the Department of Digital, Culture, Media and Sport says he will make a decision ‘in due course’.
A phase two investigation is likely to add at least another six to eight months to the deal process, a source at City said.
That would bring the situation dangerously close to Nvidia’s cut-off point in September, when it has vowed to walk away if no deal is reached. The company has already had to scrap its original goal of closing the acquisition by March next year.
In China, where a battle for control of Arm’s local subsidiary has complicated matters, regulators still haven’t even started investigating Nvidia’s submissions.
At the same time, the British government is considering the national security implications of the deal.
The CMA has provided the ministers with an overview of the reactions of third parties on this point.
Nvidia said: “We look forward to the opportunity to discuss the initial views of the CMA and resolve any concerns raised by the government. We remain confident that this transaction will benefit Arm, its licensees, the competition and the UK.”