The UK competition regulator said Wednesday it would investigate Nvidia taking over an Army of $ 40 billion, the largest deal ever in the semiconductor industry, which would make Nvidia a strong competitor against Intel and AMD, AMD.
The Competition and Markets Authority, or CMA, said interested parties would have to comment until 27 January on the impact of the build on competition in the UK, ahead of a formal investigation starting later. this year.
Shares in Nvidia NVDA,
down more than 2.4% shortly after the opening of trade in New York.
California-based graphics chip giant Nvidia’s Santa Clara announced in September 2020 that it had reached a cash-and-stock contract to buy Army, based in Cambridge, UK, from Japanese technology company SoftBank 9984,
The agreement has drawn criticism in the UK, with shareholders, politicians and industry experts citing concerns about national security and the loss of critical home technology and jobs for a foreign buyer.
Critics have also warned that Nvidia, which overtook Intel INTC in July 2020,
as the most valuable chip maker in the world, it would gain the upper hand if the arm is adopted.
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The CMA said their investigation is likely to consider whether, under Nvidia ownership, Army would have withdrawn incentives, increased prices, or reduced the quality of its intellectual licensing services to Nvidia’s competitors.
Arm improves chip design and allows companies including Apple AAPL,
Amazon AMZN,
Samsung 005930,
and Qualcomm QCOM,
which uses Arm chips to power mobile device processors around the globe.
“The chip technology industry is worth billions and is vital to many of the products we use in our daily lives,” said CMA CEO Andrea Coscelli.
“We will work closely with other competition authorities around the world to carefully consider the impact of the contract and to ensure that end users do not deliver more expensive or lower quality products,” Coscelli said.
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The CMA’s mandate is strongly focused on competition, leaving the UK government reliant on any intervention based on national security or operational reasons. The government said in September 2020 that it was evaluating the deal, including commitments to retain British workers.
Nvidia has said it will maintain Army headquarters in Cambridge and expand its research and development presence there, including the construction of an artificial intelligence and education center.
When SoftBank bought Army in 2016, it provided legal assurances regarding Cambridge headquarters and jobs that could be enforced by the UK Acceptance Panel, which governs unions and benefits in the country. It is unclear whether Nvidia would own those promises. The agreements will also expire in September 2021, leaving Nvidia to decide on the company’s future unless the British government intervenes.
Arm employs around 6,500 people worldwide, of whom 3,000 are in the UK, with 2,500 in Cambridge.
Along with approval from the CMA, regulators from the US, China and the European Union, as well as other countries, will have to clear Nvidia’s takeover.
MarketWatch has reached out to Nvidia for comments.