Nvidia’s planned $40 billion bid to buy UK chip designer Arm from Japanese tech giant SoftBank isn’t quite as perfect as it should be, as it will most likely miss its target deadline of March 2022. . Currently, regulators in the US, UK, Europe and China are scrutinizing the deal.
Critics fear a merger with Nvidia could limit access to Arm’s “neutral” semiconductor designs
Nikkei/Nvidia and Arm . screenshots
SoftBank, Nvidia and Arm have agreed to complete the transaction within 18 months from September 2020. According to analyst Alan Priestley and other investors, the chances are high that one or more regulators will block the deal altogether.
However, Nvidia and Arm have not given up yet. In a 28-page submission to the UK’s Competition and Markets Authority (CMA), the two sides outlined why the deal should be approved. The two semiconductor firms accused critics of the deal of “romanticizing” Arm’s history, ignoring the company’s current financial position and exaggerating Arm’s current market power.
Arm was spun off from a computer company called Acorn Computers in 1990, then seen by many as the crown jewel at the pinnacle of British technology. Arm’s energy-efficient chip designs are used in about 95% of the world’s smartphones and 95% of those designed in China. Arm was purchased by SoftBank in 2016 for £24 billion (about $32 billion). Arm licenses its chip designs to more than 500 companies to manufacture their own semiconductors.
Critics fear a merger with a chip design company like Nvidia would limit access to Arm’s “neutral” semiconductor designs, leading to higher prices, fewer options, and reduce innovation in the industry. But according to Nvidia, the deal will bring more innovation and Arm benefits from increased investment.
Britain’s Digital and Culture Secretary Nadine Dorries has ordered a “phase 2” investigation into the November 2021 takeover. The investigation is being conducted by the CMA over a 24-week period, looking into antitrust concerns and national security issues related to the deal. Submissions from Nvidia and Arm make no mention of security.
Reportedly, the US Federal Trade Commission sued to block the deal in December 2021 for antitrust reasons. The European Commission, the executive body of the European Union (EU), also launched an in-depth investigation into the Nvidia-Arm deal in October 2021.