The British antitrust agency, the Competition and Markets Authority (CMA), said today that it will investigate the acquisition of British chip design company ARM by Nvidia for US$40 billion.
The CMA stated: “We may assess whether ARM has an incentive to stop providing IP authorization services to Nvidia competitors, or increase authorization prices and reduce service quality if the transaction is completed.”
Nvidia previously stated that it will continue to operate ARM as an independent subsidiary, adopting a “customer-neutral” and “open license” model. If these companies are willing to pay, they can obtain a license, even if they are direct competitors of Nvidia.
In September last year, Nvidia reached an agreement with SoftBank to acquire ARM from SoftBank at a price of approximately US$40 billion. If the transaction can be successfully completed, in terms of dollar value, this will be the largest semiconductor transaction in history, and it will create the largest chip company in the West.
In this regard, analysts said at the time that this transaction is obviously not “commonplace”, and I believe that the regulatory agencies of individual countries will evaluate this.
In the UK, the opposition to the deal is particularly strong. ARM co-founder Hermann Hauser (Hermann Hauser) said this is an absolute disaster for Cambridge, the UK and Europe. His main concern is that Nvidia may relocate ARM headquarters or reduce ARM’s staff size at some point in the future.
Hauser also stated that Nvidia will destroy ARM’s business model, which involves licensing chip designs to approximately 500 other companies, including several companies that directly compete with Nvidia. Therefore, this transaction will form a monopoly.
Although this will be the largest semiconductor transaction in history, in fact, measuring the transaction based solely on the value of the dollar may far underestimate the importance of this transaction.
ARM is the core of almost every smartphone sold today, from Apple iPhones to Samsung Galaxy devices running Google’s Android software. In addition to smartphone processors, ARM technology is also used in many smaller chips integrated into various computer systems and devices.
For Nvidia, ARM represents an opportunity to boost its fast-growing business of selling chipsets and software to data centers. In addition, this transaction will further strengthen Nvidia’s position and make it more difficult for competitors to shake its business.