The Competition and Markets Authority (CMA) has warned that the Nvidia takeover of ARM could raise competition concerns.

According to the CMA, the $40-billion deal could stifle innovation and restrict access to Arm’s intellectual property by Nvidia’s rivals, harming competitiveness

Affected areas could include data centres, gaming, the ‘internet of things’, and self-driving cars.

The CMA provided the Phase 1 report to the Secretary of State for Digital, Culture, Media and Sport (DCMS) in late July. According to sources familiar with the report, it warned that the deal would be anti-competitive and affect the UK’s national security.

The sources warned that this may result in a deeper review into the deal, and might see it cancelled altogether.

Now, with the publication of a summary of the report, the CMA has confirmed these concerns in an official statement.

The CMA also found that Nvidia’s proposed measures to regulate its behaviour did not alleviate its concerns.

What Next?

As such, the CMA has said that an in-depth Phase 2 investigation into the deal between NVIDIA and Arm is warranted on competition grounds.

Andrea Coscelli, chief executive of the CMA, said: “We’re concerned that NVIDIA controlling Arm could create real problems for NVIDIA’s rivals by limiting their access to key technologies, and ultimately stifling innovation across a number of important and growing markets. This could end up with consumers missing out on new products, or prices going up.

“The chip technology industry is worth billions and is vital to products that businesses and consumers rely on every day. This includes the critical data processing and datacentre technology that supports digital businesses across the economy, and the future development of artificial intelligence technologies that will be important to growth industries like robotics and self-driving cars.”

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As a major player in the global semiconductor chip industry, ARM is one of the UK’s major tech success stories. Its designs are widely used across the sector, helping it set standards for chips used in a variety of devices, such as mobile phones, smart TVs, and tablets.

While ARM was originally purchased by Japan’s Softbank in 2016, its status as a neutral holding company meant that its business did not overlap with ARM’s. As such, it was ruled that there would be no conflict of interest.

However, Nvidia’s aim is to combine its AI computing knowledge with ARM’s chip manufacturing capacity, helping drive innovation in the field. The merger could see both companies integrate and Nvidia move some of ARM’s operations out of the UK.

When the deal was originally struck in September last year, MPs called for assurances that ARM’s headquarters would remain in the UK.

The CMA report, however, has not mentioned any national security concerns, only that it had received from third parties representations on the subject.