Nvidia’s $40 Billion Arm Deal Faces Tougher Antitrust Hurdle

Aoife White
·3 min read

(Bloomberg) -- Nvidia Corp.’s planned $40 billion takeover of chipmaker Arm Ltd. should get a longer antitrust probe, British regulators warned after rejecting potential concessions.

In the first reaction on the deal from a major antitrust watchdog, the Competition and Markets Authority said in a statement that it was concerned the deal would give Nvidia too much control over semiconductors used in data center services, smart devices and gaming consoles.

Lengthy regulatory reviews can add risk to closing a deal that looks set to overshoot Nvidia’s initial target to close in March 2022. Nvidia hasn’t yet filed for European Union approval, where an extended review takes at least five months.

Nvidia’s move to buy Arm from Japan’s SoftBank Group Corp. initially raised antitrust concerns from rivals and customers such as Qualcomm Inc. and Alphabet Inc.’s Google over how Nvidia might control Arm’s licenses for essential chip technology.

U.K. Digital Secretary Oliver Dowden must still decide whether the CMA should open an in-depth probe. Dowden is also separately weighing whether the deal should be blocked over potential risks to national security. The U.K. is leaning toward a veto, according to a person familiar with the matter earlier this month.

The CMA’s analysis “gives Dowden an excellent opportunity to send the case to a phase 2 without reaching a decision on national security grounds yet,” said Aitor Ortiz, a Bloomberg Intelligence analyst. Antitrust approval is possible if the companies were to agree a more complex solution to solve regulatory concerns, he said.

Nvidia looks “forward to the opportunity to address the CMA’s initial views and resolve any concerns the government may have,” the company said in an emailed statement.

“We remain confident that this transaction will be beneficial to Arm, its licensees, competition, and the U.K.,” it said.

Nvidia shares rose 2.4 percent at 10:24 a.m. in New York, more than double the Russell 3000 Index Semiconductors Subsector’s gain.

While a longer probe raises the risk of a veto to a deal, it can also give more time for companies to negotiate more complicated concessions. The CMA said it rejected as insufficient Nvidia’s offer to maintain Arm’s open licensing, nor did it see a partial sale of Arm intellectual property as allaying its concerns at this stage.

Arm owns the most widely used set of standards and designs in the $400 billion chip industry. Its technology is at the heart of most of the world’s smartphones and is finding an increasing role in computing, including in server machinery that runs corporate and government systems.

The Cambridge, England-based company has acted as a neutral party that sells chip blueprints and licenses its standards to a wide range of major technology companies, many of whom are fierce competitors. Ownership by Japan’s SoftBank, which acquired it in 2016 and which doesn’t overlap with Arm’s customers, has preserved that neutrality.

(Updates shares in ninth paragraph)

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2021 Bloomberg L.P.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting

Recommended Stories

  • Why Nvidia Stock Is Hopping Today

    Shares of Nvidia (NASDAQ: NVDA), which makes semiconductors used in video games, cryptocurrency mining, and artificial intelligence, jumped 3% through 10:15 a.m. EDT Friday. You can thank the friendly analysts at Benchmark Capital for that. Benchmark initiated coverage of Nvidia stock with a buy rating and a $230 price target -- 13% higher than where the stock trades now -- this morning, praising the company's performance in Wednesday's earnings release.

  • Nvidia forecast beats expectations, but talks on $40 billion Arm deal take longer than expected

    (Reuters) -Nvidia Corp on Wednesday said talks with regulators to clear its $40 billion proposed acquisition of British semiconductor technology firm Arm Ltd are taking longer than expected. The disclosure came as Nvidia, the world's biggest maker of graphics chips for gamers and artificial intelligence chips for data centers, forecast third-quarter revenue above Wall Street expectations on Wednesday as it benefits from a boom in demand. But investors have focused on whether Nvidia's move to acquire Arm will withstand regulatory scrutiny and close by March of next year as Nvidia promised.

  • Nvidia's $40 billion deal for ARM likely set for lengthy review

    LONDON (Reuters) -Nvidia Corp's planned $40 billion acquisition of British chip designer ARM looks set to face a lengthy inquiry after a UK regulator found the purchase by the U.S. group could hit competition and weaken rivals. Struck in September last year, the deal for Britain's most important technology company by the world's biggest maker of graphics and AI chips has been hit by a swift backlash from politicians, rivals and customers. In Britain, it has also become politically charged, with critics arguing that a rise in economic nationalism and greater awareness of the importance of infrastructure ownership means ARM, owned by Japan's SoftBank since 2016, should not be sold again.

  • Apple Tried to Hire Away Former Google Search Chief Ben Gomes

    (Bloomberg) -- When Apple Inc. was looking to hire new management for its Siri and artificial intelligence groups, it went after a pair of high-profile targets: Google’s top brass overseeing search. Apple succeeded in attracting one of those executives: John Giannandrea, who had served as Google’s search and AI chief, bringing him on as head of Siri and machine learning in 2018. That much is known. But Apple at one point also attempted to hire Giannandrea’s top search deputy and eventual success

  • Apple Delays Office Return to at Least January on Covid Rise

    (Bloomberg) -- Apple Inc. is delaying its return to corporate offices from October until January at the earliest because of surging Covid-19 cases and new variants, according to a memo sent to employees on Thursday. The company told staff it would confirm the re-opening timeline one month before employees are required to return to the office. Apple had previously aimed to require all staff to return to corporate offices by early September before delaying that until October. When employees are re

  • Nvidia's takeover of Arm raises serious concerns, says watchdog

    The UK competition watchdog proposes an in-depth probe into US firm Nvidia’s proposed £29bn takeover of Arm.

  • $40bn Arm sale faces competition probe

    The sale of British microchip company Arm to US giant Nvidia presents “significant competition concerns” and warrants closer scrutiny, the competition regulator said, as the Government weighs up steps that could block the deal.

  • Competition regulator raises concerns over Nvidia purchase of Arm

    The US tech firm’s purchase of the British computer chip designer requires further investigation, the CMA has said.

  • Why Josh Brown Just Compared Nvidia To Apple, Microsoft

    NVIDIA Corporation (NASDAQ: NVDA) is trading higher Thursday after the company announced better-than-expected second-quarter financial results. What Happened: Nvidia reported adjusted quarterly earnings of $1.04 per share, which beat the estimate of $1.02 per share. The company reported quarterly revenue of $6.51 billion, which beat the estimate of $6.33 billion. Nvidia expects third-quarter revenue to be $6.8 billion, plus or minus 2%, versus the estimate of $6.53 billion. Related Link: NVIDIA:

  • Nvidia, IBD Stock Of The Day, Impresses With Accelerating Data Center Sales

    Nvidia is the IBD Stock Of The Day after the graphics-chip maker delivered a beat-and-raise report for its fiscal second quarter.

  • Dow Jones Rallies As Tesla Races Higher After AI Day; Mercado Libre, Nvidia Near Buy Points

    The Dow Jones Industrial Average rallied 200 points Friday, as Tesla stock raced higher after its AI Day. This chip giant is near an entry.

  • DoorDash Block Worth $2.2 Billion Is Offered by SoftBank

    (Bloomberg) -- SoftBank Group Corp. is offering $2.2 billion of its stake in DoorDash Inc. in a block trade through Goldman Sachs, according to a person familiar with the matter. The premarket block trade offered 11.4 million shares at $182.95 to prevailing market prices, the person said, the latest move in SoftBank’s selling spree that nearly tripled to $14 billion last quarter. DoorDash fell 5% on Thursday, second-most in the 107-member S&P Retail Select Industry Index.The deal follows warning

  • Exclusive-China eyes pushing U.S. IPO-bound firms to hand over data control-sources

    Chinese regulators are considering pressing data-rich companies to hand over management and supervision of their data to third-party firms if they want U.S. stock listings, sources said, as part of Beijing's unprecedented scrutiny on private sector firms. The regulators believe bringing in third-party information security firms, ideally state-backed, to manage and monitor IPO hopefuls' data could effectively limit their ability to transfer Chinese onshore data overseas, one of the people said. That would help ease Beijing's growing concerns that a foreign listing might force such Chinese companies to hand over some of their data to foreign entities and undermine national security, added the person.

  • Trump officials back away from 2020 Taliban peace deal after withdrawal chaos

    A number of former senior Trump officials have sought to distance themselves from the Taliban peace deal that was signed in February 2020, with chaos erupting after the militants took control of Afghanistan this week.Why it matters: The agreement has come under new scrutiny for laying the groundwork for the U.S. military's withdrawal from Afghanistan, which coincided with a sweeping Taliban offensive that ended in the fall of Kabul on Sunday.Stay on top of the latest market trends and economic i

  • Disney is eliminating a beloved free perk at its U.S. theme parks

    A new trip-planning service called Disney Genie will help visitors at Walt Disney World and Disneyland avoid spending too much time in lines.

  • The semiconductor shortage won’t taper until 2023: Strategist

    Brad Gastwirth, Wedbush Securities Chief Technology Strategist joins the Yahoo Finance Live panel to discuss the latest Nvidia earnings.

  • Will Intel Be a Trillion-Dollar Stock by 2030?

    Intel (NASDAQ: INTC) has not shown any signs in recent years that it is on its way to a $1 trillion market capitalization. CEO Pat Gelsinger has instituted changes that could address technical challenges and spawn new lines of business. Interestingly, a $1 trillion market cap for Intel within nine years is not as far-fetched as one might assume.

  • 3 Top Restaurant Stocks to Put on Your Radar

    Whether it's a brick-and-mortar establishment or a popular food delivery business, a panel of Motley Fool contributors has identified three restaurant stocks with bright prospects that should be on your radar. Neil Patel: With a business model that was seemingly built for the disruption of the past 17 months, Chipotle Mexican Grill (NYSE: CMG) is a stock that investors need to follow. Customers who were forced to use the company's website, mobile app, and third-party delivery services during lockdowns are now very familiar with the convenience of this channel, and much of this behavior will stick going forward.

  • China's SenseTime says daily users of its augmented reality tech number 100 million

    China's SenseTime, which sells augmented reality technology to other companies, has seen global daily active users of that tech grow to 100 million from its launch of the business in 2016, a company executive said. Apps that employ SenseTime's AR tech include Twitter-like Weibo, video site Bilibili and social e-commerce app Xiaohongshu. The artificial intelligence company is best known for its facial recognition technology and has been on a Washington trade blacklist since 2019.

  • Has ON Semiconductor Corporation's (NASDAQ:ON) Impressive Stock Performance Got Anything to Do With Its Fundamentals?

    Most readers would already be aware that ON Semiconductor's (NASDAQ:ON) stock increased significantly by 15% over the...