UK competition watchdog probes Nvidia's $40bn takeover of ARM

Saleha Riaz
·2 min read
Nvidia's acquisition of ARM would potentially create a giant in the chip industry. Photo: Getty Images
Nvidia's acquisition of ARM would potentially create a giant in the chip industry. Photo: Getty Images

The UK’s Competition and Market Authority (CMA) said Wednesday it will start a formal investigation into US chipmaker Nvidia's (NVDA) takeover of ARM Holdings.

The CMA has asked for interested third parties to comment on the $40bn (£29.4bn) deal, which is due to complete later this year.

Nvidia's acquisition of ARM would potentially create a giant in the microchip industry and the regulator will look at the impact the deal could have on competition in the UK.

“The CMA is likely to consider whether, following the takeover, ARM has an incentive to withdraw, raise prices or reduce the quality of its IP licensing services to NVIDIA’s rivals,” the CMA said in a statement.

“The chip technology industry is worth billions and critical to many of the products that we use most in our everyday lives,” Andrea Coscelli, chief executive of the CMA, said in a statement.

“We will work closely with other competition authorities around the world to carefully consider the impact of the deal and ensure that it doesn’t ultimately result in consumers facing more expensive or lower quality products.”

READ MORE: Boris Johnson urged to intervene on Nvidia's $40bn ARM takeover

Nvidia announced its intention to buy Cambridge-based ARM from Japan’s SoftBank last September. Nvidia is known for its graphics chips that power video games. The company also caters to other markets including self-driving cars, artificial intelligence and data centres.

ARM develops and licenses intellectual property and software tools for chip designs. The company’s technology is used in everything from desktop computers and mobile devices to game consoles and vehicle computer systems.

ARM’s co-founder wrote an open letter to the UK prime minister last year after the Nvidia deal was announced, urging Boris Johnson to intervene in the planned sale. Hermann Hauser said Nvidia should be forced to sign legally binding terms agreeing to preserve UK jobs, maintain ARM’s market neutrality, and secure exemptions from US rules that would ban ARM from dealing with China.

Hauser said the UK government should support an IPO of ARM on the London Stock Exchange if it couldn’t secure commitments from Nvidia. ARM was previously part of the FTSE 100 before SoftBank purchased it for $32bn in 2016.

At the time, a spokesperson for the UK government said it was “closely” monitoring the deal and “would not hesitate to investigate further and take appropriate action” if appropriate.

The CMA’s remit is to assess the impact of deals on market competition. It cannot consider other potential implications in areas such as employment or industrial strategy.

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