EU to launch probe into Nvidia’s $54bn Arm takeover

·2-min read
The logo of technology company Nvidia is seen at its headquarters in Santa Clara, California, in February 2015
Nvidia first announced its intention to snap up Arm from Japanese investment fund SoftBank in September last year. Photo: Reuters/Robert Galbraith

The European Union is set to launch a formal investigation into Nvidia’s (NVDA) $54bn (£39bn) takeover of British technology company Arm amid competition concerns.

The probe is expected to open in early September after the US chipmaker officially notifies the European Commission of its plan, it has been reported.

The submission is likely to occur in the week starting 6 September, the Financial Times said, citing people familiar with the matter.

“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 explain the transaction and address any concerns they may have,” Nvidia said.

In June sources told Reuters that Nvidia may not be able to meet a March 2022 deadline for closing its deal due to European regulators’ reluctance to consider the case until after the summer holidays.

The UK’s Competition and Markets Authority (CMA) has previously said the deal could “stifle innovation across a number of markets” and that there were “serious competition concerns”.

The regulator said the move could grant Nvidia power to hurt its rivals by limiting their access to Arm’s technology, as well as leading to an increase in its prices or a reduction in the quality of its services.

Read more: Boris Johnson urged to intervene on Nvidia's $40bn Arm takeover

Nvidia first announced its intention to snap up Arm from Japanese investment fund SoftBank (SFTBF) in September last year. The acquisition is one of the largest ever in the technology sector and the biggest on record of a British tech company.

However, it has already faced a number of challenges, including from America’s Federal Trade Commission, and from Hermann Hauser and Tudor Brown, cofounders of Arm, who have been outspoken critics of the sale to Nvidia.

Hauser has previously said that he and many others were concerned that the UK would lose jobs and influence and argued Arm’s business model would be compromised.

“Surrendering the UK’s most powerful trade weapon to the US is making Britain a US vassal state,” Hauser wrote in an open letter last year.

Google (GOOG), Microsoft (MSFT) and Qualcomm (QCOM) have also raised concerns about the deal.

Cambridge-based Arm is a major global player in the semiconductor industry. Its technology is at the heart of most smartphones and smart devices worldwide – it licenses its tech to the likes of Apple (AAPL), Samsung (005930.KS) and Huawei.

Semiconductors are fundamental to current and future technologies – from artificial intelligence and quantum computing to 5G. Semiconductors also underpin the UK’s critical national infrastructure and are found in defence and national security related technologies.

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