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Nvidia and Arm deal is under regulatory investigation

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Miguel A. Rodriguez
Miguel A. Rodriguez
21 April 2021
National security concerns raised amid Nvidia and Arm $40 billion deal

Nvidia announced in September 2020 its plans to purchase the chipmaker Arm from SoftBank for $40 billion.  After the reveal, many tech-specialized companies, including Google, Microsoft, and Qualcomm, expressed concerns regarding the deal being made or not in good faith.

In February 2021, the three US companies reached out to regulators in the UK, EU, US, and China on Nvidia's influence on how Arm licenses its chipmaking technology.

At that time, Nvidia CEO Jensen Huang had the following things to say: "Nvidia will maintain Arm's open licensing model. We have no intention to 'throttle' or 'deny' Arm's supply to any customer."

Now, according to a statement made on Monday, the UK government will look into the matter and its national security implications, questioning the $40 billion deal.

Digital minister Oliver Dowden: "As a next step and to help me gather the relevant information, the UK's independent competition authority will now prepare a report on the implications of the transaction, which will help inform any further decisions."

The Competition and Markets Authority (CMA) has to assess the competition, jurisdiction and national security impact with a report due by July 30. Then, Dowden will decide whether to clear the deal.

From Nvidia's point of view, the deal doesn't present issues of national security. "We will continue to work closely with the British authorities, as we have done since the announcement of this deal," the company stated.

Following the news, Nvidia stock price took a hit and traded 3.46% lower.

Sources: theguardian.com, reuters.com

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.