The UK and the EU will launch an in-depth investigation on Nvidia’s acquisition of ARM

In the afternoon news on February 4, it is reported that the European Union and the United Kingdom will launch an in-depth market competition investigation on Nvidia’s US$40 billion acquisition of British chip design company Arm. Previously, Nvidia’s competitors had called on regulators to block the deal.

Officials and consultants in the European Union and the United Kingdom have stated that because of the increasing importance of the Arm design, they must conduct a detailed review of the acquisition. Arm’s design is commonly used in almost all smartphone processors and many other devices that require low-power chips.

According to people familiar with the matter, the EU and the UK will conduct a thorough investigation of the transaction, and the review may eventually lead to the issuance of a ban. Other sources pointed out that the agreement may still be passed unconditionally or make concessions.

The transaction was announced in September last year, and Nvidia and Arm’s current owner SoftBank set an 18-month deadline for completion of the transaction. It is predicted that regulators will ask questions before the transaction is completed.

The investigation is still in its preliminary stages. The UK Competition and Markets Authority (The UK Competition and Markets Authority) has invited market participants to submit their opinions and promised to launch a formal investigation in the coming months. The paperwork has not been formally filed in the EU.

Arm’s designs are widely used in the chip industry, and its major customers include Apple, Samsung, Qualcomm and Broadcom. Some companies that rely on Arm technology worry that they will be at a disadvantage when Arm is acquired by rival Nvidia.

Nvidia CEO Jensen Huang denied this concern. He told the media:

I can say without hesitation that Nvidia will maintain Arm’s open licensing model. We have no intention to restrict’ or reject’ any customer’s use of Arm’s services.

Nonetheless, according to several people familiar with the matter, Nvidia’s competitors have lobbied EU and UK antitrust officials to block the deal.

A competitor said:

Our main concern is that Arm will lose its neutrality. Currently, the company’s attitude towards its customers is very neutral. But what is worrying is whether, in the future, Nvidia will use Arm’s technology to help it gain an unfair competitive position.

Business executives also worry that regulators will be unable to force Arm to remain neutral in the future.

An insider said:

This transaction is likely to be blocked because there is not yet a suitable method to maintain Arm’s neutrality. There must be an irresistible economic motive behind NVIDIA’s acquisition of Arm. Otherwise, why should they pay $40 billion?

Also, after the Minister of Digital, Culture, Media and Sports Oliver Dowden (Oliver Dowden) faced pressure to intervene, the British government is studying whether the deal will have an impact on national security.

Nvidia said:

This transaction is very beneficial to innovation and market competition. We believe that regulators will see the benefits of the technology ecosystem.

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