UK Govt Begins Probe Into $40 Bln Nvidia-Arm Deal

The British Government said on Tuesday that it would be launching a thorough investigation into Nvidia Corp's (NVDA) acquisition of Cambridge-based chip designer company Arm. UK Digital and Culture Secretary Nadine Dorries ordered a phase 2 probe into Nvidia's $40 billion tender for Arm.

The probe will be conducted by the Competition and Markets Authority over a period of 24 weeks and will look into anti-trust and national security issues, which have been surrounding the deal. In its phase 1 probe, the CMA had raised several concerns with the deal.

Nvidia's proposal for Arm has come under severe scrutiny from all over the world and both the companies had issued a statement in August that the deal would not meet its initial deadline of March 2022.

Commenting on the phase 2 probe, an Nvidia spokesperson told CNBC "We plan on addressing the CMA's initial views on the impact of the transaction on competition, and we will continue to work with the U.K. government to resolve its concerns. The phase 2 process will enable us to demonstrate that the transaction will help to accelerate Arm and boost competition and innovation, including in the U.K."

Arm manufactures energy-efficient chips and these are used in most of the widely used smartphones. The company was taken over by Japan's SoftBank in 2016 for 24 billion pounds or $32 billion.

Many people are of the opinion that Nvidia's takeover of Arm will stop the easy access to Arm's "neutral" chip designs and led to higher prices and lesser of choice in the market. Nvidia, however, said that the deal will bring in more investment and thus benefit Arm in the long run.

Last month, the European Commission, the executive arm of the EU, launched its own in-depth investigation into the deal, which is also being scrutinized by regulators in the U.S. and China.

Margrethe Vestager, European Commission's executive vice-president said, "Whilst Arm and Nvidia do not directly compete, Arm's IP is an important input in products competing with those of Nvidia, for example in datacenters, automotive and in internet of things."

She said that the European Union's analysis of the deal revealed the restricted or degraded access to Arm's IP, with ripple in various semiconductors markets.

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