The Competition and Markets Authority (CMA) has said that NVIDIA’s purchase of Arm raises serious competition concerns.
The report, which has been sent to Oliver Dowden, the Secretary of State for Digital, said an “in-depth investigation” into the $40bn deal between Arm and NVIDIA is warranted.
The CMA highlighted that NVIDIA and Arm are both participants in the global semiconductor industry. While NVIDIA is a US-company which supplies semiconductor chips, Arm is a UK-based company which supplies semiconductor intellectual property (IP).
With an estimated 70 per cent of the world’s population uses technology based on Arm’s IP the watchdog judged that NVIDIA would have both means and incentive to restrict competitors from accessing Arm architecture if the merger goes ahead.
According to Andrea Coscelli, chief executive of the CMA, the purchase could therefore “create real problems for NVIDIA’s rivals” and stifle innovation across a number of markets including data centres, gaming, and self-driving cars. She cautioned that customers could face higher prices as a result.
A spokesperson for NVIDIA said that the company looks forward to the “opportunity to address the CMA’s initial views and resolve any concerns the Government may have.”
“We remain confident that this transaction will be beneficial to Arm, it’s licensees, competition, and the UK,” the company added.
The company may face an uphill battle according to Neil Wilson, chief markets analysts for markets.com, who said the deal “is in serious trouble” as a result of both competition and national security concerns.
He said: “There is a sense of there being a raid on top British companies. Tory governments don’t like to be too interventionist – Britain is open for business and all that – but they also don’t like to appear asleep at the wheel when blue chips get hoovered up.”
In April 2021, the Secretary of State for DCMS issued a public interest intervention notice about the takeover.
Dowden will decide whether or not the merger should be referred for an in depth phase 2 investigation on both competition and national security grounds.