The UK’s competition authority has raised significant competition concerns over Nvidia’s proposed $40bn takeover of chip designer Arm but did not cite any national security grounds for shelving the deal.
The US-based GPU specialist had wanted to complete the takeover of Cambridge-based Arm within 18 months, but that seems in doubt with the latest review from the Competition and Markets Authority (CMA).
Its report cited “detailed and reasoned submissions from customers and competitors raising concerns” across the globe.
“After careful examination, the CMA found significant competition concerns associated with the merged business’ ability and incentive to harm the competitiveness of Nvidia’s rivals (that is, to ‘foreclose’) by restricting access to Arm’s CPU IP and impairing interoperability between related products, so as to benefit Nvidia’s downstream activities and increase its profits,” it said.
The CMA said the supply of CPUs, interconnected products, GPUs and SoCs could be harmed in this way, across several global markets covering datacenter, IoT, automotive and gaming console applications.
“The CMA found that the foreclosure strategies identified would reinforce each other and would, individually and cumulatively, lead to a realistic prospect of a substantial lessening of competition, and consequently to a stifling of innovation, and more expensive or lower quality products,” the report continued.
The competitions regulator concluded that Nvidia’s suggested remedies would not address these concerns given the complexity of contracts and markets involved, the magnitude of the concerns and the “breadth and technical nature of the offer.”
Arm’s designs are found in most smartphones on the planet and technologies related to military and defense. However, the CMA decision did not reference any concerns over national security.
The UK’s digital secretary will have to decide whether to proceed to a more detailed “phase two” investigation. Lawmakers from the ruling Conservative Party are increasingly pressuring the government not to allow strategically important British companies to be taken over by foreign businesses.
SoftBank acquired Arm for $32bn (£23bn) back in 2016.