Nvidia is seeking regulatory approvals for its acquisition of Arm in multiple jurisdictions, but the company faces hurdles virtually everywhere. After the EU and UK launched full investigations into the deal, Nvidia has now revealed that the US Federal Trade Commission has also expressed “concerns” about the takeover. These concerns will require unspecified corrective action.
“US Federal Trade Commission (FTC) regulators have expressed concerns about the transaction, and we are in discussions with the FTC regarding remedies to address these concerns,” said a statement from Nvidia.
The concerns of the US FTC are unknown, but it is more than likely that they are very similar to those expressed by anti-competitive regulators in Europe and the UK. Nvidia is in dire need of CPU assets to process data centers, high performance computing (HPC), advanced computing, and automotive segments. However, once it obtains Arm and develops its own solutions for said segments, it will compete with the licensees of Arm technologies.
While Nvidia management assures that its Grace processor is designed only to accompany its compute GPUs, it also claims that it could handle general data center workloads and therefore compete with EPYC processors from AMD, Graviton d ‘Amazon, Ampère’s Altra and Intel’s Xeon.
“[Grace] is a niche product that focuses on AI workloads, focused on the type of high performance computing workloads, and can also be very important in terms of supercomputing, ”said Colette Kress, CFO of Nvidia, at a recent conference, “So we’re in the early stages, and we think within the next couple of years it will hit the market to be our first overall data center processor.”
Regulators in the UK and the EU have refused to back the deal after their initial reviews and have launched more in-depth investigations that will take months. The UK Competition and Markets Authority (CMA) is concerned about two things: whether the transaction would provide Nvidia with significant benefits that would result in a substantial lessening of competition (SLC), as well as the impact on the interests of Nvidia. UK national security. British regulators believe that the commitments offered by Nvidia are not enough to alleviate national security concerns.
“Arm occupies a unique place in the global technology supply chain, and we must ensure that the implications of this transaction are fully taken into account,” said Nadine Dorries, UK digital secretary. “The CMA will now report to me on competition and national security grounds and advise me on next steps. The government’s commitment to our thriving technology sector is unwavering and we welcome foreign investment, but it is right that we fully consider the implications of this transaction. “
China remains another major concern, as the country’s government is unlikely to approve the deal under which an American company would obtain intellectual property widely used by Chinese domestic chip designers.
“We continue to believe that the proposed deal is unlikely to gain the required approval,” Wedbush Securities analyst Matt Bryson said in a report, Barrons reports. “The biggest concern remains China. […] With a tie-up with Arm Nvidia raising real questions about the risk of market concentration, we just don’t know why China would risk a U.S. company taking control of Arm’s intellectual property (regardless of whether the ownership intellectual property is domiciled in the United Kingdom). “
In general, regulators and many Arm licensees don’t really like the idea of the Nvidia buyout. Meanwhile, some financial analysts didn’t think the deal would go through at all.
“It is almost certain that the acquisition will not materialize before the September 2022 breach fee deadline and is likely to cause Nvidia to withdraw from the deal or restructure the deal,” it reads. an EnerTuition report (published by SeekingAlpha).
Others, like Bank of America’s Vivek Arya, call the transaction “unwarranted and unnecessary.”
“The buyout faces significant regulatory obstacles [and] has no short- or medium-term benefit to Nvidia’s growth prospects, with Arm-related commitments possible through a simple IP license, ”Arya wrote.