- In a 28-page written presentation to the UK’s Competition and Markets Authority published on Monday, the semiconductor heavyweight explained why the deal should be approved.
- He accused critics of the deal of “romanticizing” Arm’s history, ignoring the company’s current financial situation, and exaggerating Arm’s current market power.
- Critics worry that a merger with Nvidia — which designs its own chips — could restrict access to Arm’s “neutral” semiconductor designs and lead to higher prices, fewer options and less innovation in the industry.
Nvidia’s $40 billion bid to buy UK chip designer Arm from Japanese tech giant SoftBank isn’t quite going to plan.
deal, which is Ready to miss target deadline of March 2022, is being closely scrutinized by regulators in the US, UK, Europe and China, who are concerned it could reduce competition. SoftBank, Nvidia and Arm agreed to complete the transaction within 18 months of September 2020.
According to Gartner analyst Alan Priestley and other investors, there is a high chance that one or more regulators will halt the deal altogether.
But Nvidia and Arm just aren’t giving up.
In a 28-page written presentation to the UK’s Competition and Markets Authority published on Monday, the semiconductor heavyweight explained why the deal should be approved. He accused critics of the deal of “romanticizing” Arm’s history, ignoring the company’s current financial situation, and exaggerating Arm’s current market power.
Widely seen as a jewel in the crown of the UK tech industry, Arm was spun out of an early computing company called Acorn Computers in 1990. The company’s energy-efficient chip designs are used in 95% of the world’s smartphones and 95%. Design chips in China. company, bought by softbank for £24 billion ($32 billion) in 2016, licenses its chip designs to more than 500 companies that use them to make their own semiconductors.
Critics worry that a merger with Nvidia — which designs its own chips — could restrict access to Arm’s “neutral” semiconductor designs and lead to higher prices, fewer options and less innovation in the industry. But Nvidia argues that the deal will lead to more innovation and that branch will benefit from the increased investment.
Britain’s Secretary of Digital and Culture, Nadine Dorries, ordered a “Phase 2” investigation into the acquisition in November. The investigation – which is being carried out by the CMA over a 24-week period – will look into antitrust concerns and national security issues associated with the deal. One time security is not mentioned in the submissions from Nvidia and Arm.
Elsewhere, the Federal Trade Commission sued in December to block the deal on antitrust grounds, while the European Commission, the EU’s executive arm, launched its own in-depth investigation into the deal in October.
“While Arm and Nvidia do not compete directly, Arm’s IP is an important input into products competing with Nvidia, for example in datacenters, automotive and the Internet of Things,” said European Commission Executive Vice President Margrethe Vestager. Statement.
“Our analysis suggests that Arm’s acquisition by Nvidia may limit or degrade access to Arm’s IP, with distorting implications in many markets where semiconductors are used,” she said.
In their submissions, Nvidia and Arm attempted to downplay claims that the deal could cut competitors off key Arm technology.
“Theory is not up to scrutiny,” he wrote. “Trying to foreclose Arm licensees would immediately reduce Arm’s licensing revenue, which would immediately hurt Nvidia’s investments. No financially rational, publicly traded entity would embrace such a self-defeating strategy.” Will put it.”
Some critics have suggested that SoftBank should list Arm on the stock exchange rather than sell the Cambridge-headquartered firm to Nvidia. But Nvidia and Arm claim the acquisition is the best option on the table and the IPO will put pressure on Arm to “refocus its attention and limit investments.”
Both wrote: “In the media, deal opponents urged the CMA to block the deal so that Arm could pursue an initial public offering, which they believe will be launched on the London Stock Exchange in the UK. with a high market valuation and success, but public markets are unsatisfactory. Capital markets demand profitability and performance.”
“SoftBank considered and rejected an IPO in 2019 and again in early 2020 because markets would not give SoftBank the required return on its investment. While Arm’s licensees such as Apple, Qualcomm and Amazon saw skyrocketing revenue growth and profits As well as rising market valuations, Arm has recently endured comparatively flat revenues, rising costs and lower profits that will likely present challenges for the 30-year-old public company. Capital Markets would expect to make significant strategic changes, including cutting costs for value.”