Government orders deeper probe into NVIDIA’s $40bn acquisition of Arm - but will uncertainty ‘sap the morale’ of Cambridge staff?
An in-depth probe on the $40bn (£31.2bn) acquisition of Cambridge-based Arm by US tech giant NVIDIA has been ordered by the government over competition and national security concerns.
Digital secretary Nadine Dorries has written to the The Competition and Markets Authority (CMA) instructing it to do an in-depth phase two probe of the proposed takeover.
Cambridge’s Labour MP Daniel Zeichner welcomed the probe, but warned that if the uncertainty dragged on, the uncertainty could sap the morale of staff.
The CMA, which is the competition regulator, raised concerns in August about the deal, suggesting it could restrict access of NVIDIA’s rival to Arm’s technology, which is used to make semiconductor chips and is present in most mobile phones across the world, including Apple and Samsung devices, along with many laptops and other devices.
The first investigation, ordered by previous digital secretary Oliver Dowden, warned there was a possibility of a “substantial lessening of competition across four key markets” - data centres, the Internet of Things, the automotive sector and gaming applications.
Ms Dorries said: “I have carefully considered the Competition and Markets Authority’s Phase One report into Nvidia’s proposed takeover of Arm and have decided to ask them to undertake a further in-depth Phase Two investigation.
“Arm has a unique place in the global technology supply chain and we must make sure the implications of this transaction are fully considered.
“The CMA will now report to me on competition and national security grounds and provide advice on the next steps.
“The government’s commitment to our thriving tech sector is unwavering and we welcome foreign investment, but it is right that we fully consider the implications of this transaction.”
NVIDIA has pledged to keep Arm’s headquarters in Cambridge and pledged investment to creating an AI centre of excellence. It has also launched the UK’s most powerful supercomputer, the Cambridge-1, as a force for UK life sciences. It is being used by the likes of GSK and AstraZeneca, and researchers from Guy’s and St Thomas’ NHS Foundation Trust, King’s College London and Oxford Nanopore Technologies plan to use the system.
The deal for NVIDIA to acquire Arm from its current owner, the Japanese conglomerate SoftBank, was first announced in September 2020 and raised concerns over jobs as well as technology sovereignty from the likes of Hermann Hauser, the Acorn Computers co-founder, who was involved in the development of the first Arm processor.
For its part, NVIDIA has said it will retain Arm’s famous business model, which enables its computer chip designs and instruction sets, defining how software controls processors, to be licensed to all for use in devices.
A spokesperson for NVIDIA said: “We plan on addressing 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 concerns.
“The phase two process will enable us to demonstrate that the transaction will help to accelerate Arm and boost competition and innovation, including in the UK.”
Reacting to the government’s move, Mr Zeichner said: “I welcome further investigation which vindicated the warnings many of us made at the outset.
“My only fear is that this drags on and on, leaving Arm mired in uncertainty, which in such a fast-moving sector poses a risk in itself. It is also sapping the morale of local staff who are the lifeblood of the company.
“The government needs to get a grip and work out how to help ensure that great Cambridge success stories like Arm can continue to be the success we all want them to be.
“Dither and delay, the dismantling of the industrial strategy and a confused regulatory structure are all making things harder.”
NVIDIA CEO Jensen Huang previously told the Cambridge Independent: “My vision is of investing in Arm as we create the world’s premier company for the age of AI, and of building a long-term partnership with Cambridge. Your city will become our European home, where I look forward to spending significant time.
“Arm will remain, as it is today, based in Cambridge, its intellectual property registered in the UK, employing some of the world’s greatest minds. We will establish a world-class AI research and education centre here in Cambridge, and build an AI supercomputer to fuel ground-breaking research. We will keep sacred Arm’s open licensing model, and use it to bring more innovations to more people, more quickly. We will invest in Arm’s partnerships with its customers and its network of outstanding developers.”