Recently, the European Union’s Trade Commission launched an investigation into NVIDIA’s $40 billion dollar acquisition of chip manufacturer, ARM, back in September 2020. A UK-based company, SoftBank, was the former owner of ARM who facilitated the deal. Since then, the semiconductor industry has been facing immense supply chain problems around the world.
EU’s Executive Vice President, Margrethe Vestager, stated how NVIDIA purchasing ARM could potentially extend this shortage a lot longer due to making it harder for most manufacturers to access ARM’s technology. Currently, ARM licenses its chips to a wide range of companies that including Apple, Samsung, and Qualcomm. Most of these companies are direct competitors of one another. The fear is that NVIDIA’s control of ARM may choke out the few remaining companies on the outside and result in NVIDIA having full control of the semiconductor market.
Before the acquisition of ARM, NVIDIA’s main drivers were its development of graphic processing units (GPUs) for the computer, mobile devices, and automotive industries. Recently, it expanded into the artificial intelligence sector as well as the semiconductor industry with its acquisition of ARM. NVIDIA’s CEO Jensen Huang claims that competitors will not be jeopardizing competitors due to maintaining ARM’s open licensing model. However, officials are skeptical of the company holding its neutrality for the long term.
Prior to the investigation, NVIDIA submitted documents and commitments to address concerns regarding this issue. The EU deemed these deliverables “insufficient” due to not being enough to dismiss potentially serious effects from the acquisition. Not only does the EU plan to investigate the financial repercussions of the deal, but also the information security repercussions. Officials fear that NVIDIA could jeopardize current research at ARM that could be detrimental to many products that are currently in use by large companies to make NVIDIA’s products more profitable.
It is very unlikely that this will be the last investigation to hit NVIDIA’s acquisition. China and the United States could take action as well to make sure the deal doesn’t have damaging effects on an important tech market. The current EU investigation will likely set back the acquisition by 18 months at least. No telling how long it can drag out if other parties get involved, however.
The tech market is no stranger to having a few larger players. Before Intel’s announcement of breaking into the graphic processing units market a year ago. The graphic processing units marketing consisted of only GeForce (NVIDIA) and Radeon (AMD) GPUs on the market. On the flipside, computer processing units (CPUs), are dominated by two major players in Intel and AMD. Once NVIDIA’s acquisition of ARM goes through, I wouldn’t be surprised if an NVIDIA CPU emerges on the market for desktop and laptop computers.