United Kingdom could block NVIDIA’s purchase of Arm
NVIDIA signed a definitive agreement to purchase Arm, the U.K.-based semiconductor and software design company that develops the widely-used ARM architecture, in September of 2020. Even though that was more than a year ago, NVIDIA and Arm are still facing various regulatory loopholes, such as an investigation by the European Commission that opened last month. Now there’s another potential roadblock: a national security review by the United Kingdom.
The Competition and Markets Authority of the U.K. has been instructed to carry out a national security review of the Arm purchase (via Bloomberg). The group already conducted an initial report in July of this year, which found that the transaction raises the possibility of a “substantial lessening of competition across four key markets,” including data centers, Internet of Things devices, the automotive sector, and gaming applications. Even though NVIDIA has attempted to appease regulators with promises that NVIDIA will maintain Arm’s current neutral licensing model, the U.K. (among others) doesn’t seem convinced at the moment.
The investigation is said to take 24 weeks at least and could be subject to an additional eight-week extension. “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,” Digital Secretary Nadine Dorries said in a statement.
The U.K.’s national security review follows the European Commission opening its own investigation, which is primarily focused on potential anti-competitive measures. Given that Arm’s technology is powering an ever-growing number of devices, from smartphones to the MacBook Pro 16 (2021), it’s not too surprising that government agencies want to verify the deal won’t harm the global technology industry.
Given the length of the investigation, it might get a bit tight for NVIDIA to complete the acquisition of Arm. The company said in September last year that the acquisition was scheduled to be completed within 18 months. However, Jensen Huang, NVIDIA CEO, admitted in August that it may take a little bit longer than expected. Arm’s current owner, SoftBank, agreed with NVIDIA that the acquisition should be completed by the end of 2022.
Disclaimer: The author of this article owns stock in Nvidia. This does not impact the opinions and facts stated here.