UK watchdog growls at Nvidia's Arm deal

Competition and Market Authority invites input from "interested third parties" on the likely impact of the US company's proposed takeover of British chip design specialist.

It was not unexpected. The UK's Competition and Market Authority (CMA), in preparation for a formal investigation later this year, has invited comment from "interested third parties" on what they think might happen if US chipmaker Nvidia gets its way and swallows up Arm, whose chip designs are found in most smartphones.

The watchdog, mindful of the possible harmful effect on UK competition, said it was likely to consider whether, following a takeover, "Arm [will have] an incentive to withdraw, raise prices or reduce the quality of its IP licensing services to Nvidia's rivals."

Post-Brexit, CMA takes over responsibility from the European Union in assessing big merger deals and how they might impact the UK, although it's unlikely to have enough clout to do anything about a tie-up between Nvidia and Arm.

CMA chief executive Andrea Coscelli more or less acknowledged that. "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," he said.

Nvidia made its $40 billion move for Britain's Arm – albeit owned by Japan's SoftBank – last September. It hopes to wrap up the approval process within about 18 months from signing the deal.

"The regulatory process is confidential and we won't be providing comment on milestones along the way," said Nvidia in a statement.

Rip it up and start again?

A worry among many industry watchers is that Nvidia, should its takeover plan be successful, will rip up Arm's neutral licensing model.

The thinking here is that Nvidia would have little obvious incentive to see Arm's technology sold to its competitors. Another worrying possibility is that Arm's customers might balk at paying a rival, so forcing up prices as they look for alternatives.

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Arm co-founder Herrmann Hauser has gone so far as to argue that an Arm sale to Nvidia would be tantamount to Britain throwing in the towel when it came to upholding tech sovereignty in "crucial" smartphone processor components. Hauser further feared that the UK's supply chains in a number of other important areas, particularly PCs, next-generation data center servers and AI graph processors, would also be restricted.

China has reason to be concerned too. With 95% of Chinese-designed chips using Arm's semiconductor architectures, Huawei has been urging China's State Administration for Market Regulations either to block the deal, or impose conditions ensuring that Chinese firms will continue to have access to Arm's technology.

Arm has a Shanghai-based joint venture, Arm China, with Hopu Investments, a Chinese private equity firm. This gives China's government the right to review the proposed sale.

— Ken Wieland, contributing editor, special to Light Reading

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