NVIDIA’s $40bn acquisition of Cambridge-based Arm to be investigated by Competition and Markets Authority
The $40bn acquisition of Arm by NVIDIA is to be examined by the Competition and Markets Authority (CMA).
The CMA announced today (January 6) that it will look into the proposed deal’s impact on competition and determine whether it could lead to more expensive or lower quality products, or a withdrawal of services for NVIDIA’s rivals.
It is inviting views on the impact of the deal on competition as part of its investigation.
US-based chip designer and producer NVIDIA announced in September last year that it had reached agreement to buy Cambridge-based Arm from the Japanese-owned conglomerate Softbank. The deal is subject to regulatory approval and was expected to take 18 months to complete.
Arm develops and licences intellectual property and software tools for chip designs and its technology is found in most of the world’s mobile phones, along with many desktop and laptop computers, game consoles and vehicle computer systems.
Andrea Coscelli, chief executive of the CMA, said: “The chip technology industry is worth billions and critical to many of the products that we use most in our everyday lives. 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.”
News of the CMA’s intervention was swiftly welcomed by Cambridge’s Labour MP Daniel Zeichner.
He said: “This is a huge deal and I have said from day one it is vital that Arm’s neutrality is preserved.
“This sale is all about an American company that is eyeing up our tech.
“We need to protect customers so prices do not rise and quality drops and the government must not hand over decision-making power to a foreign state.
“I am pleased that the government has finally heeded calls by myself, leading figures in the tech industry and the unions for an inquiry.
“This is a serious matter, not only does it affect Cambridge jobs, but decisions taken will have a big impact on the role of the UK in the production of global technology.”
Cambridge entrepreneur Hermann Hauser, who co-founded Arm, has warned the deal could have an impact on Arm’s famous open-licence business model, affect jobs in Cambridge and would represent another loss of technology sovereignty to the US.
But writing in the Cambridge Independent, NVIDIA chief executive Jensen Huang sought to allay those fears.
“I recognise that Arm is a hugely important part of Cambridge’s business and innovation ecosystem,” he said.
“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.”
The CMA said it would investigate whether the deak would give Arm the “incentive to withdraw, raise prices or reduce the quality of its IP licensing services to NVIDIA’s rivals”.
But it stressed that it “cannot consider other potential effects that a merger might have, for example on employment or industrial strategy”.
And the CMA added: “Any national security concerns would be a matter for the UK government, which can issue a public interest intervention notice, if appropriate.”
The initial invitation to comment runs from today until January 27. Written comments should be emailed to Anastasija Rogozianskaja at firstname.lastname@example.org.
The CMA has established a dedicated page on the acquisition at https://www.gov.uk/cma-cases/nvidia-slash-arm-merger-inquiry.
While the timetable for the investigation has yet to be set out, the CMA did confirm that there will be further opportunities to submit views once the formal phase one investigation begins.