Nvidia’s Arm Deal Faces U.K. National Security Probe
(Bloomberg) -- Nvidia Corp.’s bid for British chipmaker Arm Ltd. faces a national security review in the U.K., in another potential pitfall for a deal under intense scrutiny from antitrust regulators across the world.
The Competition and Markets Authority has been instructed to carry out the review alongside a closer look at whether there are competition concerns, Nadine Dorries, Secretary of State for Culture and Digital said in a statement Tuesday.
The U.K. has been amping up oversight of deals that may affect defense and has weighed a potential veto of Nvidia’s takeover bid. The minister’s decision is separate to the nation’s antitrust review of how the deal may affect rivals and customers. Companies can allay security and antitrust concerns by selling off units or making binding pledges.
“Arm has a unique place in the global technology supply chain and we must make sure the implications of this transaction are fully considered,” Dorries said.
Lengthy regulatory reviews look set to see the company miss its initial target to close the deal in March 2022, which can be further extended until September. The EU has a March 15 deadline to rule on its review.
Rivals and chip customers have criticized the deal, valued at $40 billion when it was announced more than a year ago. Qualcomm Inc.and Alphabet Inc.’s Google have voiced complaints that Nvidia’s control of Arm’s licenses for essential chip technology could threaten the Cambridge, England-based chip designer’s role as a neutral partner often compared to the Switzerland of the semiconductor industry.
Other customers, including Broadcom Inc., MediaTek Inc. and Marvell Technology Group Ltd., have been supportive of the transaction.
“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,” a spokesperson for Nvidia said.
In the first reaction on the deal from a major antitrust watchdog, the CMA already warned in August that the deal could allow Nvidia to cut off its rivals’ access to Arm’s ubiquitous and power-efficient designs used in technology ranging from data centers to smartphones.
The CMA will deliver a final report to Dorries in 24 weeks, though an eight-week extension could be added. The deal could be blocked or cleared on both grounds, blocked on one ground, cleared on both grounds or approved subject to remedies.
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