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Nvidia's $40 Billion Arm Takeover Warrants an In-Depth Competition Probe, UK Regulator Says

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  • The U.K.’s Competition and Markets Authority says it found "significant competition concerns" with the Nvidia-Arm deal.
  • The regulator is worried Nvidia could hamper competition by restricting access to Arm's intellectual property.
  • The government said it was set to make a decision on whether to proceed to a phase-two investigation in due course.

Nvidia's $40 billion takeover of British chip designer Arm should be subject to an in-depth investigation, the U.K.'s competition regulator said Friday.

The Competition and Markets Authority says it has sent a summary of its initial findings into the proposed acquisition to Britain's Secretary of State for Digital Oliver Dowden.

In the report, the watchdog says it found "significant competition concerns" with the deal. The CMA is worried Nvidia could hamper competition by restricting access to Arm's intellectual property and "impairing interoperability between related products."

Such strategies could would lead to a potential "substantial lessening of competition" in several markets, including the supply of data centers, car software and gaming consoles, the regulator said.

Nvidia has repeatedly insisted it won't change Arm's business model.

"We look forward to the opportunity to address the CMA's initial views and resolve any concerns the Government may have," a Nvidia spokesperson told CNBC. "We remain confident that this transaction will be beneficial to Arm, its licensees, competition, and the UK."

It comes after the British government intervened in the Nvidia-Arm deal on national security grounds. Dowden had asked the CMA to prepare a report on the implications of Nvidia's Arm purchase.

The government said it was set to make a decision on whether to proceed to a phase-two investigation in due course.

"We have received the CMA's phase one report and the Digital Secretary will make a decision on whether to proceed to the next phase of the investigation in due course," a government spokesperson said.

What is Arm?

Arm is a Cambridge, England-based company which specializes in designs for semiconductor architecture. The firm's chip blueprints are licensed to chip manufacturers around the world. It is being sold by SoftBank to Nvidia for $40 billion.

Major tech firms including Qualcomm, Microsoft and Google have complained the deal will harm competition in the semiconductor industry.

This week, Nvidia admitted the planned takeover was unlikely to be completed within the 18-month timeframe it had initially laid out.

U.K. Prime Minister Boris Johnson is under pressure from lawmakers within his own party to step in to prevent promising homegrown tech companies from being snapped up by foreign firms.

Nexperia, a Chinese-owned firm, recently agreed to acquire the U.K.'s largest chip manufacturing facility. Johnson subsequently ordered national security advisor Stephen Lovegrove to investigate the deal. A decision could be announced in the coming days.

- CNBC's Sam Shead contributed to this report.

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