Qualcomm opposes $ 40 billion acquisition of Arm by Nvidia
The facade of the Qualcomm office in San Jose, California.
Justin Sullivan | Getty Images News | Getty Images
The company has told the Federal Trade Commission, European Commission, UK Competition and Markets Authority and China’s State Administration for Market Regulation that it is concerned about the purchase of Nvidia, which is currently owned by the Japanese tech giant. SoftBank.
The FTC investigation has moved into a “second phase” and the US regulator has asked SoftBank, Nvidia and Arm to provide more information, according to two sources who are aware of the deal but wished to remain anonymous because of the private nature of the debates.
Complying with the information request will likely take several months as several large documents will need to be produced, the sources said. During the second phase, the FTC will also engage with other companies who may have relevant information that can help them make a decision, they added.
The European Commission, the EU executive branch and the CMA declined to comment, while the FTC and SAMR did not immediately respond to a request for comment from CNBC.
Qualcomm, which declined to comment for the story, has contacted regulators because it believes they will play an important role in determining whether or not the deal goes through, the sources say. He spoke to representatives who focus on antitrust law and mergers.
Nvidia told CNBC it was confident regulators would see the benefits of the acquisition. Arm declined to comment and SoftBank did not immediately respond to a request for comment from CNBC.
“You envision a very thorough, very painful and very long investigation,” one of the sources told CNBC.
Arm was formed from an early computer company called Acorn Computers in 1990. The company’s energy-efficient chip architectures are used in 95% of the world’s smartphones and 95% of chips designed in China.
The company licenses its chip designs to more than 500 companies who use them to manufacture their own chips.
Qualcomm opposed the takeover of Nvidia because it believes there is a very high risk that Nvidia will become a guardian of Arm’s technology and prevent other chipmakers from using Arm’s intellectual property, according to sources. He doesn’t think Nvidia will be able to fully capitalize on the acquisition without crossing some lines that people worry about, they said.
Upon announcing the acquisition, Nvidia and Arm said the deal would create the “world’s first IT company in the age of AI.” The duo are committed to keeping Arm’s headquarters in Cambridge, UK, and investing heavily in the company.
“This combination has huge benefits for both companies, our customers and the industry,” Nvidia CEO Jensen Huang said when announcing the deal.
However, five industry sources, including two technology investors, told CNBC they believe the deal has a very high chance of being blocked by one or more of the regulators.
“At the end of the day, whether this deal is anti-competitive or not, is based on a very simple idea: Arm is a catalyst for competition,” the same source told CNBC. “It allows companies to be competitive. That you are MediaTek, Amazon Web Services, Qualcomm or NXP. Any company, regardless of their R&D (research and development) budget, can take and license Arm and build their own Arm-based processor. It is a unique model. “
The source added, “The incentive (for Arm) is to share its technology with as many people as possible, and the only thing they can get in return is royalties. This creates trust between Arm and its licensees. These licensees feed the information. to Arm who can (help) make better products to enable the next generation (of products) to earn more income. It’s a virtuous circle. “
Across the Atlantic, chip start-up AI Graphcore has voiced its concerns to the UK’s Competition and Markets Authority. Graphcore CEO Nigel Toon told CNBC in December that Graphcore viewed the deal as anti-competitive.
“This risks shutting down or limiting other companies’ access to the cutting edge CPU processor designs that are so important in the tech world, from data centers to mobiles, cars and on-board devices. all kinds, ”he said.
Local chip makers in China, including Huawei urged Beijing to try to block the deal for fear of being at a disadvantage if Arm ends up in the hands of a U.S. company.
A spokesperson for Nvidia told CNBC: “As we progress through the review process, we are confident that regulators and customers will see the benefits of our plan to continue the open licensing model. and to ensure a transparent, collaborative relationship with Arm licensees. Our vision for Arm will help all Arm licensees grow their businesses and expand into new markets. “