NVIDIA ARM deal now under EU investigation –and is unlikely to happen
13-09-2021 | By Robin Mitchell
The NVIDIA ARM deal has been in the news so much, and it seems to be going nowhere. What challenges has the deal faced, why is the EU now involved, and will the deal even happen?
Why has Nvidia faced so much challenge with its acquisition of ARM?
Last year, Nvidia announced to the world that it would purchase ARM with the idea that Nvidia and ARM could grow and serve customers better together. Nvidia thought that this would be received well and that the public would be cheering them on. But, like most companies, Nvidia is very out-of-touch with what the public actually thinks, and the announcement of the merger was met with absolute hostility.
Semiconductor companies get bought out by other semiconductor companies all the time, and no one bats an eye; Intel bought Altera, Microchip bought AVR, and NXP bought Freescale Semiconductor. However, ARM is very different to all of these companies for one simple reason; its designs and intellectual property essentially underpins all modern technology. Of course, there are many CPU architectures on the market, but only two matter; Intel x86 and ARM.
Furthermore, ARM sells its intellectual property to anyone who asks for it regardless of their intention or field of application (while Intel carefully controls who can and cannot produce Intel-compatible CPUs). The widespread nature of ARM combined with its non-discriminatory licensing policy makes it an ideal architecture for those who do not want to develop their own CPU, supporting software, and libraries.
While Nvidia may not produce competitor products to ARM, there is a fear that Nvidia may manipulate ARM to exclude customers who develop competitor products to Nvidia and change ARMs internal operation to better work with Nvidia products. Another worry is that ARM being taken over by an American company would see ARM subjected to US law, which could significantly impact many countries around the world, including China and Russia.
As such, the acquisition of ARM by Nvidia is being scrutinized by most trading regulators (as ARM is present in many jurisdictions around the world), and it would seem that the case against the acquisition is pretty strong.
EU Regulators to look into the deal
Recently, the Nvidia acquisition of ARM has taken another turn, with EU regulatory bodies announcing an investigation that will take place later this year. Nvidia said it is ready to counter any concerns that EU regulators raise, but whether this will be successful is unknown.
Interestingly, the investigation announcement is that it cannot occur until Nvidia officially announces to the EU commission that it will be planning to purchase ARM. According to those involved with the process, Nvidia will be submitting its acquisition request around September 6th. It has also been said that the EU investigation will only occur after the UK competition and markets authority have finished their probe into the deal.
Will the deal even happen?
Considering the large-scale backlash against the deal combined with the widespread nature of ARM, it is looking more likely that the deal will not go through. From the point of view of competition, allowing a foreign company to have control of a UK business that develops products that work with ARM CPUs is a potential recipe for disaster. AMD is one of NVIDIA’s significant competitors in the GPU market. With ARM potentially becoming a mainstream desktop CPU solution, NVIDIA could easily tweak ARM designs to work better with NVIDIA GPUs.
Public pressure against the deal is enormous, and key individuals, including the co-founder of ARM, Hermann Hauser, have stated their disapproval of the acquisition. Of course, ARM is not self-owned, and its majority share is owned by SoftBank. However, the difference between SoftBank and NVIDIA is that SoftBank is an investment company that focuses on technology companies meaning that it is not particularly interested in the internal workings of those companies.
However, the UK government may decide to step in at the last moment and halt the deal on national security grounds. Considering how the recent withdrawal of troops from Afghanistan has tainted US/UK relations, the UK may see a sudden intervention in the deal as justified (i.e. if the US won’t keep allies informed, why should they have control of the UK companies).
Overall, it is likely that NVIDIA will not be able to acquire ARM, and this attempt could help push RISC-V into the commercial light as a viable alternative to ARM.