EU to formally probe Nvidia's $54bn takeover over British chip designer Arm – report

Hot on heels of 'significant concerns' from the UK

Nvidia told The Reg it would work "with the European Commission to address any concerns they may have" after reports it is set open a formal competition law investigation into the AI firm's purchase of Arm from Softbank.

The Financial Times reported this morning that the political bloc will examine whether or not the $54bn takeover deal will result in reduced competition between the world's leading chip designers.

"The investigation is likely to begin after Nvidia officially notifies the European Commission of its plan to acquire Arm," said the UK financial newspaper, quoting two people in the know about Nvidia's plans, "with the US chipmaker planning to make its submission in the week starting September 6."

An Nvidia spokesperson told The Reg: "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."

CFO Colette Kress told investors on an earnings call for the firm's Q2 2022 last week: "We are working through the regulatory process, although some Arm licensees have expressed concerns and objected to the transaction.

EU regulators were always expected to raise concerns about the deal but are following in the footsteps of Britain's Competition and Markets Authority, which made a surprise announcement last week that it believes the deal will harm competition for CPU, GPU and system-on-chip designs. A formal government report will be delivered in January 2022.

Japan's SoftBank conglomerate first floated the idea of selling Cambridge-headquartered chip designer Arm last year, having bought the company in 2016 for £23bn ($32bn at the time of the deal). An $22bn premium on that price would represent a healthy return on that investment.

Aside from Brussels, China is also expected to raise its own serious concerns over the buyout. Arm is one of the few chip designers that is mostly unaffected by US sanctions on chip design technology, meaning if the UK company entered US ownership, China would potentially lose access to technology underpinning its globally important chip supply chain.

While companies such as Huawei have been forced into action by US sanctions targeting it specifically, so far those efforts are at a very early stage. According to reports earlier this week, officials in America had approved licence applications for Entity List wallflower Huawei, so it could buy chips for its growing auto component business.

As for Arm, it has suspended hiring until the Nvidia buyout is complete, as The Register exclusively reported earlier this year.

British competition regulators have OK'd the purchase of Newport Wafer Fab by China-based biz Wingtech while simultaneously halting the buyout of Ultra Electronics by US firm Advent International over competition law fears. ®