Graphics card manufacturer Nvidia has been attempting to buy chip designer Arm for almost a year now. After months of rumours, Team Green revealed that it would be buying the British-based chip company for $40 billion. Unfortunately, for them, the deal is not going smoothly.
As the $40 billion deal plans to combine two of the world's largest computer chip companies, antitrust regulators are getting involved. Currently, the United States, United Kingdom and China are scrutinising the merger. However, the UK is getting particularly fierce.
UK CMA investigates Nvidia Arm deal
Starting last week, the UK’s Competition and Markets Authority has recommended a Level 2 investigation into the deal. The CMA claims that the gigantic merge of Nvidia and Arm has significant competition concerns.
In a press release, CMA Chief Executive Andrea Coscelli explained why the regulator is pursuing the merger:
“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. This could end up with consumers missing out on new products, or prices going up.”
Why this deal could be dangerous
A summary of the ongoing report states that the “Merger would afford the merged business a significant degree of control” over chip manufacturing. Essentially, the buyout could result in an monopoly state over the computer chip industry, an in incredibly lucrative industry.
Additionally, the report lists the following reasons as to why the Merger would be bad for competition:
- The CMA received a substantial number of detailed and reasoned submissions from customers and competitors raising concerns in numerous markets. After careful examination, the CMA found significant competition concerns associated with the merged business’ ability and incentive to harm the competitiveness of NVIDIA’s rivals.
- The CMA found significant competition concerns as a result of the effect of such foreclosure in the supply of CPUs, interconnect products, GPUs, and SoCs across several global markets, spanning the datacentre, internet-of-things, automotive and gaming console applications.
Nvidia has a deadline
Nvidia does have a timeline in which this massive $40 billion deal must be completed by. In a report by The Verge, it's revealed that the company has until next year to complete the real. If Nvidia is unable to merge the two companies by then, the deal is off.
Clearing one regulatory body might be an attainable goal, but Team Green has three huge forces after them. It’s possible the deal could clear, but should it?