EU joins UK and US in investigating Nvidia's Arm acquisition

EU joins UK and US in investigating Nvidia's Arm acquisition

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EU joins UK and US in investigating Nvidia's Arm acquisition

Arm's IP is an important input in products competing with those of NVIDIA, says EU competition chief

The European Commission has opened an investigation into Nvidia's proposed $40 billion (£29 billion) bid for British chip designer Arm.

The antitrust regulator said it was concerned that the proposed transaction could lead to reduced innovation, less choice and higher prices in the semiconductor industry.

The merged entity could also restrict access to Arm's technology by Nvidia's rivals, it noted.

The US chipmaker announced that it had entered into a definitive agreement with SoftBank Group to acquire Arm last year, in a $40 billion transaction. Nvidia promised that Arm would operate as a separate division after completion of the deal and that it would support Arm's R&D efforts, as well as providing access to the company's entire suite of products.

Because Nvidia is an Arm licensee, the deal has triggered alarm among other licensees, who were worried about the potential impact on Arm's position as a neutral supplier.

Arm is headquartered in Cambridge, UK, and owned by Japan's SoftBank.

Nearly every smartphone maker in the world, including Apple and Samsung, uses Arm's chip designs.

The Commission said its preliminary investigation suggested that the merged entity would have the 'economic incentive' to engage in strategies that could reduce competition for the supply of products across different application fields, such as:

EU competition chief Margrethe Vestager said that the investigation "aims to ensure that companies active in Europe continue having effective access to the technology that is necessary to produce state-of-the-art semiconductor products at competitive prices.

"Semiconductors are everywhere in products and devices that we use everyday as well as in infrastructure such as datacentres. Whilst Arm and Nvidia do not directly compete, Arm's IP is an important input in products competing with those of Nvidia, for example in datacentres, automotive and in Internet of Things," she added.

Nvidia told Reuters it was 'working closely' with the Commission.

'We look forward to the opportunity to address their initial concerns and continue demonstrating that the transaction will help to accelerate Arm and boost competition and innovation, including in the EU.'

The Commission has until 15th March to decide whether to clear or block the deal.

Regulators in the USA and the UK are also investigating the deal.

In August, the Competition and Markets Authority recommended a Phase 2 investigation after concluding that the acquisition could stifle innovation.

The watchdog said it was concerned that the loss of competition would ultimately result in 'foreclosure in the supply of CPUs, interconnect products, GPUs, and SoCs across several global markets, spanning the datacentre, internet-of-things, automotive, and gaming console applications'.

The US Federal Trade Commission announced an in-depth probe into the deal in February - reportedly after Qualcomm, Google and Microsoft complained to regulators about the mammoth merger.

Nvidia said it was confident that both customers and regulators would see the 'benefits of our plan to continue Arm's open licensing model and ensure a transparent, collaborative relationship with Arm's licensees'.

The company hopes the acquisition will help to create a computing firm for the age of AI, supporting new developments in robotics, autonomous driving, healthcare, life sciences and other fields.