Nvidia Arm Deal Faces Deeper Probe by European Regulators

By Todd R. Weiss

October 28, 2021

With continuing concerns about the potential for stifled competition in Nvidia’s proposed $40 billion acquisition of Arm, the European Commission (EC) is opening an “in-depth investigation” into the matter to give itself more time to review the potential transaction.

The EC announced its move on Oct. 27 after conducting an earlier investigation that determined that there are still questions that need to be answered before the EC issues a decision in the case.

“The commission is concerned that the merged entity would have the ability and incentive to restrict access by Nvidia’s rivals to Arm’s technology and that the proposed transaction could lead to higher prices, less choice and reduced innovation in the semiconductor industry,” the agency said in a statement.

“Following its preliminary investigation, the commission considers that Arm has significant market power on the market for the licensing of Central Processing Unit (CPU) IP for use in processor products,” the statement continued. “Therefore, the commission has concerns that the merged entity would have the ability to restrict or degrade access to Arm’s technology by providers of processor products that Nvidia may compete with [in the marketplace].”

Those concerns surround hardware including data center CPUs, smart network interconnects (SmartNICs), semiconductors for automotive advanced driver-assistance systems (ADAS), SoCs and other systems, according to the EC. The EC’s in-depth investigation will be conducted under the European Union’s Merger Regulation and the EC said it expects to issue a decision by March 15, 2022, which is 90 working days from its latest ruling.

“Semiconductors are everywhere in products and devices that we use every day as well as in infrastructure such as data centers,” EC executive vice president Margrethe Vestager, who is responsible for competition policy, said in a statement. “Whilst Arm and Nvidia do not directly compete, Arm’s IP is an important input in products competing with those of Nvidia, for example in data centers, automotive and the internet of things (IoT).”

The group’s analysis shows that the acquisition of Arm by Nvidia could lead to restricted or degraded access to Arm’s IP, with distorted effects in many markets where semiconductors are used,” said Vestager. “Our investigation aims to ensure that companies active in Europe continue having effective access to the technology that is necessary to produce state-of-the-art semiconductor products at competitive prices.”

The EC’s upcoming investigation will look at the effects of the proposed acquisition to determine whether the group’s initial competition concerns regarding these markets are confirmed.

One of the main concerns of the commission is that Arm licensees might be reluctant to continue sharing commercially sensitive information with the merged entity because they are competing with Nvidia, the statement continued. Another concern for the commission is that after a merger Nvidia could refocus some of Arm’s R&D spending on products that are most profitable for Nvidia downstream, to the detriment of players heavily relying on certain Arm IP in other areas, the agency said.

The commission said it will continue to work closely with similar competition authorities around the world as it pursues its new in-depth investigation of the matter.

In a statement to EnterpriseAI, an Nvidia spokesperson said the company is “working closely with the European Commission through the regulatory process. We look forward to the opportunity to address their initial concerns and continue demonstrating that the transaction will help to accelerate Arm and boost competition and innovation, including in the EU.”

An Arm spokesperson declined to comment on the regulatory matters and deferred comments to Nvidia.

Several IT analysts reacted to the latest EC news with varying degrees of pessimism or optimism about the ultimate decision from the agency.

“I have said all along that the acquisition of Arm by Nvidia has a real potential to negatively affect all of the Arm licensees, many of which would be in direct competition with Nvidia in the graphics and AI space,” said Jack E. Gold, president and principal analyst with J. Gold Associates, LLC. “Nvidia has stated that it would not get in the way of Arm’s current business model and freely license their technology as usual. But how would we know if the influence of Nvidia was driving Arm R&D and engineering in a particular direction to benefit Nvidia over the Arm licensees?”

Such moves could be either subtle or blatant, and leave no way to know for sure, said Gold. “So, the EC is correct – the result could lead to less competition as Arm is the engine behind so many products and companies. I think the stated goal of Nvidia to acquire Arm so it can license its IP through Arm channels could be accomplished without the outright acquisition of Arm.”

Also notable, said Gold, is that some companies are already looking at alternatives to Arm, such as RISC-V or the Open Compute Project, to prepare if the acquisition goes through and they lose access to the semiconductor IP they relied on in the past.

“But these alternatives are nowhere near as complete or have as many functional components as Arm does, so it is not a great solution for many current licensees, besides which changing out a complete architecture for a new one is a huge effort,” said Gold. “And the fact that so many of the key chip companies, including Arm licensees, are opposed to this deal have given more impetus to the EC review.”

In the end, said Gold, he still does not see the merger happening. “My ultimate guess is, having come this far and with the increased scrutiny that the EC is bringing to the deal, it is now a long shot to be completed.”

Another analyst, Patrick Moorhead, principal analyst with Moor Insights & Strategy, said the new in-depth EC investigation is not a surprise at all, but that is not the only potential stumbling block for the deal.

“When the deal was announced I thought China and the EU would be challenges,” said Moorhead. “I have confidence that the deal will go through in the EU with some Nvidia concessions, but China is still a crapshoot.”

One analyst, however, ​​​​​Karl Freund, the founder and principal analyst at Cambrian AI Research, said he thinks the latest EC action is uncalled for in this case.

“These concerns assume that the combined entity would be stupid enough to undermine the value of Arm by taking these actions,” said Freund. “This would play into the hands of RISC-V, which would actually spur competition. These concerns are downright silly.”

Nvidia announced its $40 billion acquisition offer for Arm in September of 2020, which has set a cascade of events in motion. Several major tech companies, including Google, Microsoft and rival chipmaker Qualcomm, have continued to vocally oppose the deal, issuing repeated concerns about its negative effects on competition and pricing.

But in June of 2021, three other chip companies – Broadcom, Marvell and MediaTek – backed the acquisition and began publicly saying that they see the move as one that could ultimately benefit their own businesses.

The Nvidia acquisition of Arm was set up when Japanese technology investment company Softbank, which bought Arm in July of 2016 in a $32.25 billion all-cash deal, chose to sell the company after hemorrhaging cash since the first quarter of 2020. Softback had been looking to sell off assets to raise money after the company’s earlier bets on the rise of connected devices failed to pay off. The company’s Vision Fund, its AI investment fund, reportedly suffered a $13 billion annual loss in its fiscal year ending in March 2020.

Acquiring Arm would solidify Nvidia’s standing as a major player in wireless and other markets as it makes steady inroads in enterprise data centers. The graphics leader has released a stream of ever-more powerful GPUs targeting machine learning and other AI workloads that now dominate corporate data centers.

The Nvidia Arm acquisition proposal has taken on more interest this year due to the global chip shortage and increased compute demands for AI, machine learning and other technologies in response to the COVID-19 pandemic, according to a recent Datanami story. Chip production slowdowns and component shortages caused by pandemic-related shutdowns around the world have contributed to the problems, putting pressure on a wide variety of chip-starved industries.

In August, Nvidia’s Arm acquisition plans hit a major roadblock after a report from a U.K. regulatory agency criticized the deal, saying it could “lead to a realistic prospect of a substantial lessening of competition” in the globally-important chip industry.

The 10-page executive summary of the report, which was issued by the U.K.’s Competition and Markets Authority (CMA), was delivered to U.K. Digital Secretary Oliver Dowden in response to his April order for a Phase One inquiry into the proposed acquisition of U.K.-based Arm. Dowden’s order specified that the CMA evaluate the deal on competition grounds and report back to the government. The executive summary, which was released Aug. 20, is being provided by the government ahead of the full CMA report.

“The CMA found significant competition concerns as a result of the effect of [the proposed acquisition] in the supply of CPUs, interconnect products, GPUs and SoCs across several global markets, spanning the data center, internet of things, automotive and gaming console applications,” the report states.

According to the report, Dowden, who is the digital secretary for the U.K. Department for Digital, Culture, Media & Sport, will now decide whether he should order a deeper Phase Two investigation by the CMA into these concerns. There is no set period or deadline for him to issue such an order, “but it must take into account the need to make a decision as soon as reasonably practicable to reduce uncertainty.”

The U.K. government has also separately been considering the national security implications of the transaction, according to the executive summary.

This story first appeared in sister publication EntepriseAI.news.

Subscribe to HPCwire's Weekly Update!

Be the most informed person in the room! Stay ahead of the tech trends with industry updates delivered to you every week!

A Big Memory Nvidia GH200 Next to Your Desk: Closer Than You Think

February 22, 2024

Students of the microprocessor may recall that the original 8086/8088 processors did not have floating point units. The motherboard often had an extra socket for an optional 8087 math coprocessor. The math coprocessor ma Read more…

IonQ Reports Advance on Path to Networked Quantum Computing

February 22, 2024

IonQ reported reaching a milestone in its efforts to use entangled photon-ion connectivity to scale its quantum computers. IonQ’s quantum computers are based on trapped ions which feature long coherence times and qubit Read more…

Apple Rolls out Post Quantum Security for iOS

February 21, 2024

Think implementing so-called Post Quantum Cryptography (PQC) isn't important because quantum computers able to decrypt current RSA codes don’t yet exist? Not Apple. Today the consumer electronics giant started rolling Read more…

GenAI Having Major Impact on Data Culture, Survey Says

February 21, 2024

While 2023 was the year of GenAI, the adoption rates for GenAI did not match expectations. Most organizations are continuing to invest in GenAI but are yet to derive any substantial value from it. However, the GenAI hyp Read more…

QED-C Issues New Quantum Benchmarking Paper

February 20, 2024

The Quantum Economic Development Consortium last week released a new paper on benchmarking – Quantum Algorithm Exploration using Application-Oriented Performance Benchmarks – that builds on earlier work and is an eff Read more…

AWS Solution Channel

Shutterstock 2283618597

Deep-dive into Ansys Fluent performance on Ansys Gateway powered by AWS

Today, we’re going to deep-dive into the performance and associated cost of running computational fluid dynamics (CFD) simulations on AWS using Ansys Fluent through the Ansys Gateway powered by AWS (or just “Ansys Gateway” for the rest of this post). Read more…

Atom Computing Reports Advance in Scaling Up Neutral Atom Qubit Arrays

February 15, 2024

The scale-up challenge facing quantum computing (QC) is daunting and varied. It’s commonly held that 1 million qubits (or more) will be needed to deliver practical fault tolerant QC. It’s also a varied challenge beca Read more…

A Big Memory Nvidia GH200 Next to Your Desk: Closer Than You Think

February 22, 2024

Students of the microprocessor may recall that the original 8086/8088 processors did not have floating point units. The motherboard often had an extra socket fo Read more…

Apple Rolls out Post Quantum Security for iOS

February 21, 2024

Think implementing so-called Post Quantum Cryptography (PQC) isn't important because quantum computers able to decrypt current RSA codes don’t yet exist? Not Read more…

QED-C Issues New Quantum Benchmarking Paper

February 20, 2024

The Quantum Economic Development Consortium last week released a new paper on benchmarking – Quantum Algorithm Exploration using Application-Oriented Performa Read more…

The Pulse of HPC: Tracking 4.5 Million Heartbeats of 3D Coronary Flow

February 15, 2024

Working in Duke University's Randles Lab, Cyrus Tanade, a National Science Foundation graduate student fellow and Ph.D. candidate in biomedical engineering, is Read more…

It Doesn’t Get Much SWEETER: The Winter HPC Computing Festival in Corpus Christi

February 14, 2024

(Main Photo by Visit Corpus Christi CrowdRiff) Texas A&M University's High-Performance Research Computing (HPRC) team hosted the "SWEETER Winter Comput Read more…

Q-Roundup: Diraq’s War Chest, DARPA’s Bet on Topological Qubits, Citi/Classiq Explore Optimization, WEF’s Quantum Blueprint

February 13, 2024

Yesterday, Australian start-up Diraq added $15 million to its war chest (now $120 million) to build a fault tolerant computer based on quantum dots. Last week D Read more…

2024 Winter Classic: Razor Thin Margins in HPL/HPCG

February 12, 2024

The first task for the 11 teams in the 2024 Winter Classic student cluster competition was to run and optimize the LINPACK and HPCG benchmarks. As usual, the Read more…

2024 Winter Classic: We’re Back!

February 9, 2024

The fourth edition of the Winter Classic Invitational Student Cluster Competition is up and running. This year, we have 11 teams of eager students representin Read more…

CORNELL I-WAY DEMONSTRATION PITS PARASITE AGAINST VICTIM

October 6, 1995

Ithaca, NY --Visitors to this year's Supercomputing '95 (SC'95) conference will witness a life-and-death struggle between parasite and victim, using virtual Read more…

SGI POWERS VIRTUAL OPERATING ROOM USED IN SURGEON TRAINING

October 6, 1995

Surgery simulations to date have largely been created through the development of dedicated applications requiring considerable programming and computer graphi Read more…

U.S. Will Relax Export Restrictions on Supercomputers

October 6, 1995

New York, NY -- U.S. President Bill Clinton has announced that he will definitely relax restrictions on exports of high-performance computers, giving a boost Read more…

Dutch HPC Center Will Have 20 GFlop, 76-Node SP2 Online by 1996

October 6, 1995

Amsterdam, the Netherlands -- SARA, (Stichting Academisch Rekencentrum Amsterdam), Academic Computing Services of Amsterdam recently announced that it has pur Read more…

Cray Delivers J916 Compact Supercomputer to Solvay Chemical

October 6, 1995

Eagan, Minn. -- Cray Research Inc. has delivered a Cray J916 low-cost compact supercomputer and Cray's UniChem client/server computational chemistry software Read more…

NEC Laboratory Reviews First Year of Cooperative Projects

October 6, 1995

Sankt Augustin, Germany -- NEC C&C (Computers and Communication) Research Laboratory at the GMD Technopark has wrapped up its first year of operation. Read more…

Sun and Sybase Say SQL Server 11 Benchmarks at 4544.60 tpmC

October 6, 1995

Mountain View, Calif. -- Sun Microsystems, Inc. and Sybase, Inc. recently announced the first benchmark results for SQL Server 11. The result represents a n Read more…

New Study Says Parallel Processing Market Will Reach $14B in 1999

October 6, 1995

Mountain View, Calif. -- A study by the Palo Alto Management Group (PAMG) indicates the market for parallel processing systems will increase at more than 4 Read more…

Leading Solution Providers

Contributors

CORNELL I-WAY DEMONSTRATION PITS PARASITE AGAINST VICTIM

October 6, 1995

Ithaca, NY --Visitors to this year's Supercomputing '95 (SC'95) conference will witness a life-and-death struggle between parasite and victim, using virtual Read more…

SGI POWERS VIRTUAL OPERATING ROOM USED IN SURGEON TRAINING

October 6, 1995

Surgery simulations to date have largely been created through the development of dedicated applications requiring considerable programming and computer graphi Read more…

U.S. Will Relax Export Restrictions on Supercomputers

October 6, 1995

New York, NY -- U.S. President Bill Clinton has announced that he will definitely relax restrictions on exports of high-performance computers, giving a boost Read more…

Dutch HPC Center Will Have 20 GFlop, 76-Node SP2 Online by 1996

October 6, 1995

Amsterdam, the Netherlands -- SARA, (Stichting Academisch Rekencentrum Amsterdam), Academic Computing Services of Amsterdam recently announced that it has pur Read more…

Cray Delivers J916 Compact Supercomputer to Solvay Chemical

October 6, 1995

Eagan, Minn. -- Cray Research Inc. has delivered a Cray J916 low-cost compact supercomputer and Cray's UniChem client/server computational chemistry software Read more…

NEC Laboratory Reviews First Year of Cooperative Projects

October 6, 1995

Sankt Augustin, Germany -- NEC C&C (Computers and Communication) Research Laboratory at the GMD Technopark has wrapped up its first year of operation. Read more…

Sun and Sybase Say SQL Server 11 Benchmarks at 4544.60 tpmC

October 6, 1995

Mountain View, Calif. -- Sun Microsystems, Inc. and Sybase, Inc. recently announced the first benchmark results for SQL Server 11. The result represents a n Read more…

New Study Says Parallel Processing Market Will Reach $14B in 1999

October 6, 1995

Mountain View, Calif. -- A study by the Palo Alto Management Group (PAMG) indicates the market for parallel processing systems will increase at more than 4 Read more…

  • arrow
  • Click Here for More Headlines
  • arrow
HPCwire