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NVIDIA (NASDAQ: NVDA), the leading graphics card designer, continues to face substantial regulatory resistance when it comes to its plans to acquire UK chip designer Arm Ltd.
According to a statement released by the UK Competition and Markets Authority (CMA), the agreement raises serious competition concerns:
“If the deal goes through, the CMA is concerned that the combined company would have the ability and incentive to undermine the competitiveness of NVIDIA’s competitors by restricting access to Arm’s intellectual property (IP). Arm’s intellectual property is used by companies that produce semiconductor chips and related products, in competition with NVIDIA. “
The CMA added that reduced competition could “Stifle innovation in a number of markets, including data centers, gaming, the Internet of Things and self-driving cars.”
While conceding that NVIDIA has offered a behavioral remedy to counter the competition concerns, the CMA concluded that a full Phase 2 investigation is now warranted.
Readers should note that NVIDIA is expected to complete the agreement to acquire Arm by September 2022. Otherwise, Japan’s SoftBank group, which currently owns Arm, will gain the right to retain $ 1.25 billion in fees. a break. Keep in mind that NVIDIA has already paid this amount to SoftBank as a deposit.
We noted in a previous article that SoftBank could opt for an IPO of Arm if the NVIDIA deal fails. According to details revealed by The Telegraph, the Japanese tech giant sees New York as the most likely location for Arm’s IPO:
“… Sources close to the parties have said that while the delays and obstacles to competition prove insurmountable, a stock market float remains under consideration. New York is considered the most likely location, although a source said no formal process is underway. “
Meanwhile, NVIDIA is also facing hurdles in China, where Huawei Technologies Ltd. reportedly voiced concerns that his access to Arm’s intellectual property could be hampered by the deal.
As a reminder, ARM designs silicon chips and licensing instruction sets that govern how the chips communicate. Additionally, ARM’s intellectual property, including the company’s Reduced Instruction Set Computing (ISA) (RISC) instruction set architecture, is used by Apple, Qualcomm, Samsung and Huawei for their smartphone chips, thus corresponding to a market coverage of about 90 percent.
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