Government to order 'phase 2' probe into Nvidia-Arm deal
The UK, EU and USA are all investigating the deal for signs of anti-competitive practices
The British government is expected to order an in-depth probe into US chip giant Nvidia's $40 billion (£30 billion) bid for UK-based chip designer Arm Ltd., over antitrust and national security concerns.
According to the Sunday Times, Digital and Culture Secretary Nadine Dorries will this week instruct the Competition & Markets Authority (CMA) to undertake a 'phase 2' probe of the acquisition.
The inquiry will take around six months, following which the government could approve the deal, block it, or allow it to pass with certain undertakings.
The government declined to comment.
Nvidia said it would work with the government to address its concerns. It said a phase 2 probe would allow it to show how the deal would help strengthen Arm and encourage competition.
The US chipmaker agreed to buy Arm from Softbank in September 2020, triggering a backlash from rivals, politicians and customers. Nvidia is itself an Arm licensee, prompting fears that it could give itself preferential treatment. Other licensees are concerned that it could impact Arm's position as a neutral supplier.
Companies including Apple, Samsung and Qualcomm use Arm technology to produce their own processors. Nearly every smartphone in the world, for example, uses Arm's chip designs.
Nvidia has said the fears are baseless. It has long promised that Arm would operate as a separate division within the company.
In April, the British government ordered a phase one probe into the deal, with Digital Secretary Oliver Dowden saying it would be appropriate to 'properly consider the national security implications of a transaction like this'.
In its initial findings in August, the CMA warned that the merged entity could harm competition in markets around the world that rely on chip technology.
Last month, the European Commission launched its own detailed investigation into the deal. At the time, the EC 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.
The Commission's 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.
EU competition chief Margrethe Vestager said: "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."
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.
Some of Nvidia's competitors are ready to invest in Arm, if Nvidia isn't allowed to acquire it. However, Broadcom, Marvell and MediaTek have said that they support the takeover deal.