Regulators on three continents probing Nvidia's $40bn purchase of Arm, CFO confirms

US Federal Trade Commission latest to 'express concerns'

The US is a new obstacle for Nvidia to overcome in its $40bn purchase of Arm with the Federal Trade Commission voicing unease with deal – just days after a UK competition regulator launched a deeper probe into the sale.

Colette Kross, chief beancounter at Nvidia, last night confirmed the new front in the firm's 14-month effort to convince regulators that competition will not be stifled and customers will not lose out should they approve the agreement that was first announced in September 2020.

"Regulators at the US FTC have expressed concerns regarding the transaction and we are engaged in discussions with them regarding remedies to address those concerns," she said on a Q3 earnings call.

Kross did not detail the specific nature of those worries or how it is trying to resolve them. She did confirm the transaction is also "under review by China Antitrust Authority, pending the formal case initiation."

Just this week, the UK's Department of Media, Culture and Sport asked the Competition and Markets Authority to delve deeper into the purchase, saying the regulator received complaints from other vendors that Nvidia will restrict access to Arms CPU IP to benefit its profits and "downstream activities."

Nvidia has always denied that it will take actions to damage Arm's customers but any concessions it has made seem to be falling on deaf ears so far. Phase Two of the CMA's scrutiny will address national security as well as competition issues. The EU is also showing keen interest in the sale of Arm, itself launching an investigation last month.

"Despite these concerns and those raised by some Arm licensees, we continue to believe in the merits and the benefits of the acquisition to Arm, to its licensees and to the industry," said Kross.

The CMA confirmed today that the Phase Two investigation will conclude on 2 May.

Kross was on a conference call to discuss results for Q3 ended 31 October of Nvidia's fiscal 2022: revenues jumped 50 per cent to $7.1bn, with the Data Center division up 55 per cent to $2.94bn; Gaming was up 42 per cent to $3.22bn; Professional Visualization up 144 per cent to $577m; and Automotive up 8 per cent to $135m.

"Demand was strong across the board," said the CFO, but the numbers could have been bigger, as channel inventories of desktop GPUs "remain low." In the Data Centre segment, sales to hyperscale customers doubled, "fuelled by continued rapid adoption of Ampere architecture Tensor Core GPUs for both internal and external workloads."

"In networking, revenue was impacted as demand outstripped supply," she added.

Kross said Nvidia is "securing supply for next year, not just for the current year and Q4" by making upfront payments to component makers.

"We made a payment within this quarter of approximately $1.6bn out of total long-term capacity agreement of about $3.4bn. So we still have more payments to make and we will likely continue to be purchasing longer term to support our growth that we are planning for many years to come."

Huang said: "I think this whole last year was a wakeup call for everybody to be much more mindful about not taking the supply chain for granted and we were fortunate to have such good partners, but nonetheless we've secured our future."

If only dealing with regulators was as simple as, er, sorting out a global supply chain. ®

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