Takeover of Arm by Nvidia to be investigated by competition authority

Arm is one of the UK’s most successful and influential companies, designing the industry-standard chip architecture found in all categories of computing devices – from supercomputers to microcontrollers – and establishing it as the world leader in processors for mobile devices.

The Cambridge-based firm was bought by Japan’s SoftBank in 2016 for $32bn, but which is now in the process of selling it to graphics card makers Nvidia for $40bn.

The latest deal has proved controversial, with Arm co-founder Hermann Hauser describing it as a “disaster” and lamenting the fact that it was one of the few European technology firms with global relevance that is now being sold to the US.

Digital secretary Nadine Dorries has written to the Competition and Markets Authority (CMA), instructing them to carry out an in-depth review of the proposed acquisition.

The CMA had already expressed alarm over the deal, citing concerns that it could stifle innovation due to Nvidia’s already significant presence in the semiconductor industry, which could compromise Arm’s unique business model of open licensing and partner neutrality.

Today’s decision follows the completion of the ‘Phase One’ process during which the CMA conducted an initial investigation of the potential competition implications of the transaction. It found that the transaction raises the possibility of a “substantial lessening of competition across four key markets”: data centres, Internet of Things, the automotive sector and gaming applications.

Dorries also believes that national security interests continue to be relevant and should be subject to further investigation.

“I have carefully considered the CMA’s ‘Phase One’ report into Nvidia’s proposed takeover of Arm and have decided to ask them to undertake a further in-depth ‘Phase Two’ investigation,” she said. “Arm has a unique place in the global technology supply chain and we must make sure the implications of this transaction are fully considered. The CMA will now report to me on competition and national security grounds and provide advice on the next steps.

“The government’s commitment to our thriving tech sector is unwavering and we welcome foreign investment, but it is right that we fully consider the implications of this transaction.”

The CMA will now lead the ‘Phase Two’ investigation, covering both competition and national security over the next 24 weeks before it compiles a final report.

The European Commission also launched an investigation into the proposed takeover last month over concerns similar to those expressed by the CMA.