UK raises concerns on mega takeover of chip designer

Britain on Friday said a planned takeover of chip designer Arm by US firm Nvidia raises “serious competition concerns”, while the deal may still be probed on security grounds.

Japan’s SoftBank Group revealed almost a year ago that it was selling Britain-based Arm for up to $40 billion (34 billion euros) in a deal it hoped to complete in early 2022 following competition reviews in several jurisdictions.

Following its own investigation, Britain’s Competition and Markets Authority highlighted concerns that included possible prices rises to semiconductors, already facing a global shortage because of the pandemic and impacting in particular the auto sector.

“We’re concerned that Nvidia controlling Arm could create real problems for Nvidia’s rivals by limiting their access to key technologies, and ultimately stifling innovation across a number of important and growing markets,” CMA Chief Executive Andrea Coscelli said in a statement.

He noted that the chip technology industry was “vital” to everyday products.

“This includes the critical data processing and data centre technology that supports digital businesses across the economy, and the future development of artificial intelligence technologies that will be important to growth industries like robotics and self-driving cars,” Coscelli said.

The CMA said it had reported its takeover concerns to the UK government department charged with digital industry matters and arguing that “an in-depth investigation into the deal… is warranted on competition grounds”.

The watchdog meanwhile confirmed that the takeover could still face an in-depth UK probe on national security grounds.

It comes as Britain this week ordered an investigation into the takeover of UK defence technology firm Ultra Electronics by US-owned Cobham in order to assess risks to security.

– ‘Beneficial deal’ –

In a statement on Friday, Nvidia said it looked forward to the opportunity to address “the CMA’s initial views and resolve any concerns the government may have”, adding it remained confident the deal “will be beneficial to Arm, its licensees, competition, and the UK”.

Founded in 1990, Arm specialises in microprocessors and dominates the global smartphone market. But its chips are also found in sensors, smart devices and cloud services.

Nvidia, known for graphics cards favoured in the video game industry, has seen sales skyrocket during the coronavirus crisis, with gaming a popular pastime in lockdown.

SoftBank bought Arm in 2016 for $32 billion.

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