Nvidia Acquisition Of ARM In Doubt Over Government Concerns – Report

The British government is reportedly considering halting Nvidia’s acquisition of ARM Holdings over worrying national security concerns.

In September 2020, after months of rumours, it was confirmed that Cambridge-based ARM was to be sold to Nvidia for a hefty $40 billion (£28.5bn).

Nvidia’s acquisition of ARM is an unpopular move, as ARM designs power 95 percent of the world’s smartphones, and there is concern at ARM’s sale to a single chip supplier could give Nvidia too much leverage in the market.

Unpopular acquisition

The acquisition has also been opposed by one of ARM founders, Tudor Brown, as well as Hermann Hauser (involved in the development of the first ARM processor when it was part of Acorn).

Both men said the company should not be sold to a semiconductor firm, but should remain a neutral supplier to the industry.

It should be remembered however that Japan’s SoftBank had acquired ARM for $32bn in 2016, which also prompted political concern in the UK at the time, with politicians urging the government to step in to ensure that ARM remained headquartered in Cambridge.

But the tech industry now remains concerned at ARM being acquired by Nvidia, and it’s proposed acquisition is opposed by tech giants such as Alphabet, Microsoft, and Qualcomm.

Google, Microsoft and Qualcomm all manufacturer their own inhouse processors, and depend upon ARM chip designs.

However in early July ARM’s CEO, Simon Segars, strongly defended the deal, and said it was the best outcome for the British chip designer, and was a better solution than an IPO.

Regulatory probes

All of these concerns has triggered regulatory scrutiny around the world.

In January 2021 the UK competition regulator, the Competition and Markets Authority (CMA), confirmed it would investigate Nvidia’s acquisition of ARM Holdings.

And because of the global importance of ARM, in addition to the British CMA probe, the European Commission and the US Federal Trade Commission (FTC) have also launched their own probes into the matter.

Even China’s State Market Regulatory Administration is investigating the proposed deal.

In April this year, the British government responded to the global pressure, and issued a ‘public interest intervention notice’ over ARM’s sale, citing national security implications.

National security

The CMA submitted a report to the government about the matter on 30 July 2021, and there are signs that the deal may be blocked by the UK on national security grounds.

According to Bloomberg, which quoted ‘people familiar with the discussions’ as its sources, the CMA report that was delivered to the government last month allegedly ‘contains national security implications that are worrying.’

According to Bloomberg, the government could conduct another review that would focus on the national security concerns specifically.

But one of its sources said the government is currently inclined to reject the takeover, while another source said that no final decision had yet been made and that the deal may be approved if certain conditions are met.

“We continue to work through the regulatory process with the UK government,” Nvidia told Bloomberg when responding to the development. “We look forward to their questions and expect to resolve any issues they may have.”