The American graphic processing and chip unit designer Nvidia’s acquisition of ARM, the British semi-conductor and software design company has triggered numerous complaints from some of the largest technology companies of the world.
US antitrust regulators have received complaints about the acquisition because the is likely to harm competition in an area of the industry that is vital to the businesses of companies like Google, Microsoft and Qualcomm.
These companies are urging the antitrust officials to intervene in the $40 billion, said people familiar with the process. At least one of the companies wants the deal killed, they said. The acquisition would give Nvidia control over a critical supplier that licenses essential chip technology to the likes of Apple, Intel, Samsung Electronics, Amazon and China’s Huawei Technologies.
UK-based ARM licenses chip designs and related software code to all clients, rather than competing against semiconductor companies. The concern is that if Nvidia owns Arm, it could limit rivals’ access to the technology or raise the cost of access.
‘No such intention’
Nvidia has argued that it has no such intention but some rivals and ARM customers are unconvinced.
“As we proceed through the review process, we’re confident that both regulators and customers will see the benefits of our plan to continue ARM’s open licensing model and ensure a transparent, collaborative relationship with ARM’s licensees. Our vision for Arm will help all ARM licensees grow their businesses and expand into new markets,” an Nvidia spokesperson said in a statement.
Antitrust review process
Before the deal can complete, Nvidia must get through a long review process by antitrust officials in the US, UK, European Union and China. Government agencies globally are in the process of reaching out to those they believe may be affected by the transaction.
A strong opposition from large tech companies may make it difficult to win approval, delay the process or force concessions that change the value of ARM to Nvidia. This is also a risk for SoftBank Group, the current owner of ARM. The Japanese conglomerate has been trying to sell some assets to pay down debt and buy back stock.
In the US, the deal is under review by the Federal Trade Commission (FTC), which has opened an in-depth investigation of the merger and has sent information demands to third parties, according to a person familiar with the matter.
Deals like Nvidia’s acquisition of ARM, known as vertical mergers, are typically seen as less worrisome by antitrust enforcers because the companies don’t compete head to head. But that view has been criticized by advocates of more aggressive antitrust enforcement who say regulators have downplayed the competitive harm from such deals.