EU to launch formal probe into Nvidia’s 54 billion takeover of Arm

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A major deal between two global chip makers now appears to hinge on Europe.

The Financial Times has reported that Brussels may launch a formal competition probe early next month into Nvidia’s pending $54bn takeover of British chip designer Arm. The investigation comes after months of informal discussions between regulators and the US chip company. The FT report cites two people with knowledge of the process.

The probe is likely to begin after Nvidia officially notifies the European Commission of its plan to acquire Arm, according to the report.

Britain’s competition regulator said last week Nvidia’s planned acquisition of Arm could damage competition and weaken rivals. The UK’s Competition and Markets Authority said its initial assessment of the deal suggested there were “serious competition concerns”. They implied that the deal required a lengthy investigation .

The UK watchdog said it feared the deal could “stifle innovation across a number of markets.”

Competitors fear losing access to Arm technology

Nvidia announced a plan in September last year to buy the UK chip designer from SoftBank, the Japanese investment conglomerate. This triggered objections to the deal from rival chip companies. They said that Arm’s chip designs were widely licensed through the chip industry and that Nvidia would have the power to restrict rivals from using Arm technology.

Nvidia has denied that it would never do that, but the company’s rivals remain unconvinced.

Arm has long been a neutral player, according to a report in Reuters. They have been licensing key intellectual property to customers who are otherwise intense rivals. Those include Qualcomm Inc, Samsung Electronics Co Ltd and Apple Inc.

Nvidia said it has garnered the support of several Arm customers. They named Broadcom, MediaTek and Marvell in a presentation on their website.

The CMA recommended an in-depth investigation into the deal, but the UK may also decide to block the takeover on national security grounds.

“This transaction will be beneficial to Arm, its licensees, competition, and the industry. We are working through the regulatory process and we look forward to engaging with the European Commission to address any concerns they may have,” Nvidia said.

Arm did not immediately respond to a Reuters request for comment.