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UK Antitrust Agency to Probe Nvidia Acquisition of Arm

Nvidia’s intended acquisition of chip maker Arm from SoftBank, the biggest tech deal of 2020 and one with major implications for HPC and AI, is now under investigation by British regulators.

A story in today’s Wall Street Journal by Stu Woo reported that the UK’s Competition and Markets Authority (CMA) said “it was inviting third parties to comment on the merger, ahead of a formal antitrust probe later this year. The investigation will assess the deal’s possible effects on competition in the U.K. and won’t consider national security, though other British-government arms could intervene on that matter.”

The $40 billion deal announced in September would significantly expand Nvidia’s position in the chip sector from its stronghold in GPUs by giving it ownership of Arm CPU intellectual property as Arm chips are increasingly adopted beyond cell phones and other remote devices.

Arm processors power the world’s most powerful supercomputer, the Jujitsu Fugaku system housed at the RIKEN Center for Computational Science in Kobe, Japan. Leading data center server OEM’s have launched Arm-based models, and Amazon Web Services, the most widely used cloud computing services platform, offers EC2 AI instances powered by AWS Graviton processors with 64-bit Arm Neoverse cores.

Senior managers at both Nvidia and Cambridge, UK-based Arm said they were not surprised by the CMA news. According to the Journal, “A Nvidia spokesman said Wednesday the company always expected the approval process to take 18 months from the signing of the deal.”

But other observers aren’t so sanguine. While Nvidia CEO Jensen Huang has pledged to continue Arm’s open business model, enabling Arm to form business partnerships with companies around the world, the Journal reported that “Some Nvidia rivals have begun to raise concerns with regulators around the world, even before the opening of formal antitrust probes, according to a person familiar with the matter.”

In its announcement yesterday, the UK Competition and Markets Authority invited “third parties to comment on the impact that the takeover could have on competition in the UK, in advance of the CMA formal investigation starting later this year… The CMA is likely to consider whether, following the takeover, Arm has an incentive to withdraw, raise prices or reduce the quality of its IP licensing services to NVIDIA’s rivals.”

According to the Journal, Nvidia rivals have already begun voicing concerns to be looked into by the CMA, which plans to coordinate its work with other regulatory entities in Europe, the U.S. and China.  “One of the biggest challenges may come from China, which is trying to bolster domestic chip giants struggling to acquire supplies because of U.S. export restrictions driven by national-security concerns,” the Journal reported.

“The chip technology industry is worth billions and critical to many of the products that we use most in our everyday lives,” said Andrea Coscelli, chief executive of the CMA. “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.”

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