Reuters.- Nvidia Corp’s planned takeover of British processor designer ARM for about $ 40 billion hit a major roadblock on Friday after a British regulator ruled it could hurt competition and weaken rivals, so demanded a more extensive investigation.
The agreement, reached in September last year between the UK’s largest technology company and the world’s largest manufacturer of artificial intelligence and graphics processors, generated a swift response from politicians, rivals and customers.
On Friday, the British competition regulator increased the pressure, saying the merged entity could reduce competition in markets around the world and in sectors as large as data centers, the Internet of things, cars and video games.
In order to pass a deal with serious repercussions on competition, the regulator would normally require the elimination of the part of the merged business that has the power to harm rivals. But concerns around ARM and Nvidia span the entire business.
The agreement also raised alarm because it represents a threat to innovation in the industries that form the backbone of modern economies.
“We are concerned that Nvidia’s control over ARM could create real problems for Nvidia’s rivals by limiting their access to key technologies and ultimately stifling innovation in several important and growing markets,” said Andrea Coscelli, Director of the Competition and Markets Authority.
ARM is a major player in the global semiconductor industry, critical for technologies from artificial intelligence and quantum computing to 5G telecommunications networks. Their designs are compatible with almost all smartphones and millions of other devices.
Semiconductors also support critical infrastructure in Britain and the government has said they are in technology related to defense and national security issues.
The deal also sparked anger in the semiconductor industry, where ARM has long been a neutral player, licensing intellectual property to otherwise rival customers, including Qualcomm Inc, Samsung Electronics Co Ltd and Apple Inc .
The fear among chip companies is that Nvidia will have early access to ARM’s innovations instead of distributing them to the entire industry fairly.
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While Nvidia had offered solutions to lessen the impact, the UK regulator did not believe they could alleviate its concerns.
Nvidia, which expected to close the deal in March next year, said on Wednesday that it was taking longer than expected to obtain the necessary approvals and some US analysts have said they believe the acquisition will be blocked. The deadline for the deal is September next year.
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