British antitrust watchdog investigating Nvidia’s Arm acquisition

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The UK antitrust watchdog has announced that it is launching an investigation into the acquisition of Arm by Nvidia. The acquisition would amount to 40 billion dollars (32.6 billion euros).

The Competition and Markets Authority (CMA) is investigating whether the acquisition would be detrimental to the market in general. Arm grants licences that third parties can base their own chips on. The watchdog is concerned that after the acquisition Arm may increase prices, reduce the quality or stop distribution of these licenses altogether. This would give an unfair advantage to Nvidia.

Critical industry

“The chip technology industry is worth billions and critical to many of the products that we use most in our everyday lives”, said Andrea Coscelli of the CMA. “We will work closely with other competition authorities around the world to carefully consider the impact of the deal and ensure that it doesn’t ultimately result in consumers facing more expensive or lower quality products.”

Licensing model untouched

Nvidia announced the plan for the acquisition in September. The company promised that it would ensure that the licensing model would stay. Nvidia would also be planning to license its own architectures to Arm’s customers. In addition, the company would put safeguards in place to prevent Nvidia from accessing confidential information from Arm’s customers or gaining earlier access to Arm’s products.

Growth market

Nevertheless, Nvidia would benefit from gaining a competitive advantage, as it also builds its own Arm processors with its Tegra series. The company, which has traditionally focused mainly on GPUs, probably sees a major growth market in the future. As it does not have a license for the x86 architecture, it has never been able to compete in the market for processors for PCs and servers, while competitors Intel and AMD can make GPUs. Now that there is a market-wide trend from x86 to Arm, this could be the right time for Nvidia to start building Arm CPUs for desktops and servers.

Tip: Why the acquisition of ARM by Nvidia should be prohibited