Nvidia’s $40bn Arm takeover faces US competition investigation

Jensen Huang, CEO of Nvidia

Credit:  AP

Nvidia’s blockbuster takeover of British technology company Arm is being investigated by US regulators on competition grounds as rivals lobby against the deal.

The Federal Trade Commission (FTC) has sought documents and further information from Nvidia over the $40bn takeover, ahead of an investigation that is expected to take months.

The regulator recently sent a “second request” to the company, a notice that is demanding detailed material on which to base a competition investigation. It is likely to seek reams of internal documents and interview executives as part of the process.

Nvidia’s opponents have warned the regulator that the deal could reduce competition by challenging Arm’s existing neutral licensing system. 

Arm, whose chip designs are used in billions of gadgets including smartphones and connected cars, licenses its designs to hundreds of other chip companies, but other tech companies fear being owned by Nvidia will change the way it conducts business in a way that gives the US giant an unfair advantage, or leads to higher prices.

Nvidia has said it expects regulatory scrutiny and that the deal could not be complete until 2022 — 18 months after it was announced in September. Its chief executive Jensen Huang has pledged that Arm’s open business model will continue.

The company has not yet sought approval from regulators in Brussels, the UK or China, all of which are likely to scrutinise the deal closely. Nvidia is expected to file for clearance outside America next year.

The US regulator is likely to seek assurances from Nvidia that buying Arm will not limit others’ access to its technology. If it believes a conflict of interest is unavoidable, it may sue to block the merger, which could hold up the acquisition for years.

The regulatory process also involves inviting comments from interested parties, which are likely to include Arm’s customers and Nvidia’s rivals. In the UK, the deal has seen opposition from Arm grandees including co-founder Hermann Hauser.

Mr Huang has said the company is prepared to make legally-binding commitments to protect jobs in Britain. Nvidia and the FTC did not comment.