Nvidia’s deal to acquire British chip design company ARM for $40 billion hit a major snag Friday after British regulators decided the deal could weaken rivals and hurt competition in the market, and demanded a broader investigation into its implications.
The deal, which was concluded last September, sparked the anger and concern of many politicians, competitors and customers, as it combines the largest manufacturer of graphics and artificial intelligence chips in the world with the most important technology company in Britain.
ARM plays a global role in the semiconductor industry, which is the bedrock of technology from artificial intelligence and quantum computers to 5G communications networks, and its designs power nearly all smartphones and millions of other devices.
The deal in Britain has become politically charged, with critics stating that rising economic patriotism and awareness of the need to have a strong infrastructure suggest that ARM should not be sold again, given that it has been owned by Japan’s SoftBank Group since 2016.
British regulators today added more pressure, noting that the company resulting from the deal will reduce competition in markets around the world in huge sectors such as data centers, cars, Internet of things and even video games.
To allow a deal to have dangerous consequences for competition, regulators typically demand that the harm portion of the resulting enterprise be eliminated, but concerns about ARM and Nvidia have stoked the entire labor market, as well as highlighting the threat they pose to innovation in industries that are the backbone of advanced economies.