Vendors protest against $40bn NVIDIA-Arm deal - reports
Rivals and vendors, such as Google and Microsoft, have reportedly expressed concerns about the blockbuster deal and the potential ramifications it could have on the industry
NVIDIA's plans to acquire British chipmaker Arm for $40bn are facing challenges from other tech giants over anti-competition concerns.
The chipmaker announced its plans to buy Arm in September from current owner Softbank for a gargantuan $40bn. The deal is expected to take 18 months from the time of announcement to go through, but five months into the process and it is facing challenges from several fronts.
Google, Microsoft, Qualcomm and Graphcore have all reportedly voiced concerns about the merger, while UK and EU regulators have announced investigations into the deal.
We take a closer look at the challenges facing NVIDIA as it undertakes this blockbusting deal.
Neutrality fears
Google and Microsoft are reportedly concerned about the implications of NVIDIA acquiring neutral chipmaker Arm, according to Bloomberg, citing people familiar with the matter. Chipmaker Qualcomm also submitted objections to the deal to competition regulators in the US, UK, EU and China, according to CNBC.
Arm licences its chip designs to 500 companies globally and Google and Microsoft are worried that, under NVIDIA's ownership, it will limit or raise the cost of accessing Arm's technology .
NVIDIA CEO Jensen Huang rebuffed these concerns in a letter to the Financial Times, stating that he has no intention of changing Arm's licencing model.
"I can unequivocally state that NVIDIA will maintain Arm's open licensing model. We have no intention to ‘throttle' or ‘deny' Arm's supply to any customer," he wrote.
Cutting out smaller competitors
It's not just big tech companies that have reservations about NVIDIA's plans for Arm.
UK-based and Microsoft-backed Graphcore submitted its objections to the Competition and Markets Authority, according to one of Arm's early developers, Hermann Hauser. He is also a backer of chip designer Graphcore through his private equity firm Amadeus Capital.
"If NVIDIA can merge the Arm and NVIDIA designs in the same software then that locks out companies like Graphcore from entering the seller market and entering a close relationship with Arm," he told CNBC.
Graphcore, which received $222m in Series E funding late last year, manufactures AI chips and intends to directly compete with NVIDIA and Intel.
However, CEO Nigel Toon told CNBC several months ago that the planned acquisition was anti-competitive.
"We believe that NVIDIA's proposed acquisition of Arm is anti-competitive," he told the outlet.
"It risks closing-down or limiting other companies' access to leading-edge CPU processor designs which are so important across the technology world."
UK/EU government intervention
Arm was the crowning jewel of the British tech industry since its inception four decades ago, until Japanese investment firm Softbank took it out of British ownership for $32bn in 2016. Some - including Computacenter boss Mike Norris - have expressed dismay that the chipmaker will remain outside of UK hands with US firm NVIDIA.
Even Arm's co-founder, Herman Hauser, openly expressed his opposition to the deal, claiming it would be a "disaster" for Arm's customers and staff.
EU and UK regulators will be scrutinising the deal - along with their US and Chinese counterparts. The Competition and Markets Authority has opened the floor for those in the market to submit their opinions and will be launching a formal probe in the next few months.
"This deal will be thoroughly investigated…and scrutiny may lead all the way to a prohibition," said one person with direct knowledge of the situation," The FT reported, citing a person familiar with the matter.
Microsoft refused to comment on the matter, while Google and NVIDIA did not reply to request for comment by the time of publication.