NVIDIA Corporation (NASDAQ:NVDA) is the latest U.S company to come under regulatory scrutiny in the U.K. The country’s competition regulator has lodged a probe over the semiconductor giant push to acquire U.K-based chip designer Arm Holdings.
Nvidia-Arm Merger Regulatory Scrutiny
Last year, Nvidia reached an agreement to acquire the British company from Softbank in a $40 billion deal. With the acquisition, the U.S Company hoped to gain access to a renowned developer of graphics and AI chips, expected to consolidate its expertise around artificial intelligence. The merger hangs in the balance amid regulatory scrutiny.
It has since emerged that U.K’s Competition Markets Authority wants to probe the potential impact of the two companies merging. At stake is whether the takeover will result in Arm holdings raising prices for its products or reduce the quality of its IP services.
The CMA has already invited views on the proposed takeover mostly focusing on the impact the merger will have on competition in the semiconductor business. The competition investigation is poised to take 40 days after which the regulator will decide whether to carry out an i-depth review of the takeover.
There is growing concerns that Nvidia which is now the biggest chip company by market capitalization could hurt Arm’s long-standing position. The U.K based chip maker is best known for being a neutral supplier that supplies a variety of chip technology to various customers.
Arm Holdings Independency
Arm Holdings boasts of contractual agreements with Apple and Qualcomm whom it supplies Intellectual property. It is also a key supplier of chips that power smartphones worldwide. Concerned with regulatory scrutiny, Nvidia has reiterated it does not intend to interfere with Arm Holdings licensing models
Nvidia maintains it will allow Arm Holdings to keep its customer neutrality policy believed to be key to its success. The U.S Company also insists it will maintain firewalls that ensure it does not gain access to confidential information pertaining to arrangements that Arm Holdings has with its customers.
