Nvidia's proposed acquisition of British chip designer Arm has seen its fair share of will they / won't they / can they drama. The latest instalment of the saga centers around a statement provided by Nvidia to the UK's Competition and Markets Authority (CMA), in which Nvidia and Arm put forward some pretty convincing arguments in favor of the proposed $40bn deal.
Nvidia officially announced its intention to acquire Arm back in September 2020. With current owner Softbank's approval, Nvidia felt a brief period of elation but this was to be short-lived as various regional competition regulatory bodies weighed in to look closer at the deal. In the US, the FTC was spurred by interested parties such as Qualcomm, Google, and Microsoft to look very closely at Nvidia's proposed Arm acquisition. In the UK the CMA appeared to be initially taking a negative view on the buyout, but decided to make a closer and longer study into implications. The EU has started its own investigations into the implications of an Nvidia Arm tie-up too.
Circling back to the UK CMA's investigations, and the UK regulator has just published a PDF where Nvidia and Arm have presented their arguments [PDF] in favor of the acquisition. The lengthy document, called the "Phase 2 submission," looks at all the key markets addressed by Nvidia and Arm and reasons why the merged entity won't harm competition in those areas. It also bemoans the current state of affairs with Arm in limbo, while competitors are striving forward. Another significant point is that it reminds us that Nvidia is willing to commit to certain important legal obligations to get this acquisition fully approved.
Arm is at a crossroads
In the introduction to the newly published CMA document, it is highlighted by Nvidia that "Arm is at a crossroads." It is argued that Arm is going to go forward boldly with ample R&D and grow to become a stronger IT industry leader than ever, or it will be asset stripped for short term gains - bowing to shareholder pressure. The former situation would be witnessed thanks to the backing of Nvidia, and the latter if Arm were to face an IPO, argues Nvidia's statement. The Arm CEO, Simon Segars, agrees with Nvidia's case against an IPO. "We contemplated an IPO but determined that the pressure to deliver short-term revenue growth and profitability would suffocate our ability to invest, expand, move fast and innovate," noted Segars.
Inaction means Arm might be left behind by rivals
Throughout the document, as submitted to the CMA, Nvidia asserts that its business and Arm's have little if any overlap – so presents no reduced competition concerns. Additionally, the document repeatedly asserts that the merged entity will not change its competitive behavior, to the detriment of current customers. A common theme, as various markets are considered (Data Center, PC, Consoles, Smart Devices) in the document, is that rivals like AMD, Intel, Apple, Qualcomm, and others are forging ahead while Arm lives in an uncertain, underinvested land of uncertainty.
Nvidia's conclusion is that the UK CMA should approve the deal swiftly, to prevent further damage/drain on Arm, and to ensure better investment levels in the UK, and to maintain strong competition across computer architectures worldwide.
