The proposed Nvidia Arm merger has hit another hurdle after the EU and the UK both announced that they would open competition investigations into the deal. Last September, Nvidia confirmed that it had reached an agreement to purchase British chipmaker Arm for $40 billion.
Ever since the deal was announced it has been subject to scrutiny, however. Arm’s processors are used in the vast majority of smartphones and the company currently has an open-licensing business model based on customer neutrality. There are concerns that this would be threatened if Nvidia’s takeover goes ahead.
Reports now indicate that the EU and the UK have agreed to scrutinize the deal further, with both refusing to rule out putting a complete block on the deal. Alternatively, it could be approved pending concessions.
Deal’s off?
The fact that additional regulators are getting involved will come as no surprise. Late last year, the US Federal Trade Commission announced that it too would be seeking further information about the deal to ensure that it did not breach competition rules. Apparently, SoftBank, Arm’s current owner, and Nvidia have set a deadline of 18 months to complete the acquisition.
The UK investigation, which slightly predates the EU, has already asked businesses to submit their views regarding the deal. The Microsoft-backed semiconductor firm Graphcore is believed to be just one of several companies to raise its concerns. It should be made clear, however, that both investigations remain at a preliminary stage.
Currently, things do not look good for the Nvidia deal. It seems unlikely that the US firm would be keen to pay such a substantial fee to purchase Arm if it did not see some competitive benefit – and this would naturally harm its rivals in the smartphone space. Complicating things further, regulators in the UK are also examining whether an Nvidia takeover would have national security implications.
