Nvidia’s-Arm buyout is subject to UK national security investigation

Jensen Huang, CEO of Nvidia

Rick Wilking | Reuters

LONDON – The UK government said on Tuesday it wanted a full investigation into Nvidia’s takeover of chip designer Cambridge Arm, which is widely regarded as the crown jewel of the UK tech industry.

Digital and Cultural Secretary Nadine Dorries has ordered a “phase 2” investigation into Nvidia’s $ 40 billion bid for Arm. The investigation – which will be conducted by the Competition and Markets Authority over the next 24 weeks – will investigate antitrust and national security concerns associated with the deal. The CMA said it had serious concerns about the deal after completing the initial “phase 1” investigation.

The takeover is under scrutiny by regulators around the world, and chip companies said in August that the deal was now unlikely to be reached before the original March 2022 deadline.

A spokesperson for Nvidia told CNBC on Tuesday: “We plan to respond to the CMA’s initial views on the impact of the transaction on competition, and we will continue to work with the UK government to resolve its issues.”

They added: “The Phase 2 process will allow us to demonstrate that the transaction will help accelerate Arm and drive competition and innovation, including in the UK.

Arm was formed from an early computer company called Acorn Computers in 1990. The company’s energy-efficient chip architectures are used in 95% of the world’s smartphones and 95% of chips designed in China.

The company, acquired by Japanese firm SoftBank in 2016 for £ 24 billion ($ 32 billion), licenses its chip designs to more than 500 companies that use them to make their own chips.

Critics fear the merger will restrict access to Arm’s “neutral” chip designs and lead to higher prices, less choice, and reduced innovation in the semiconductor industry. But Nvidia argues that the deal will lead to more innovation and that Arm will benefit from increased investment.

“This combination has huge benefits for both companies, our customers and the industry,” said Jensen Huang, CEO of Nvidia, when announcing the deal in September 2020.

Last month, the European Commission, the EU’s executive body, launched its own in-depth investigation into the deal, which is also under review by regulators in the United States and China.

“Although Arm and Nvidia are not in direct competition, Arm’s intellectual property is an important input into competing products from Nvidia’s, for example in data centers, automotive and the Internet of Things. ”, Said Margrethe Vestager, Executive Vice-President of the European Commission, in a statement. declaration.

“Our analysis shows that the acquisition of Arm by Nvidia could lead to restricted or degraded access to Arm’s intellectual property, with distorting effects in many markets where semiconductors are used,” he said. -she adds.

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