Sale of British chip manufacturer to be probed to avoid rule-breaking

The United Kingdom and the European Union have both said they will launch investigations into Nvidia Corporation's proposed $40-billion purchase of the British chip manufacturer Arm Ltd.

The Financial Times said the in-depth probes will look at whether the deal would break competition rules, and be similar to inquiries that have already been declared in the United States and China.

Nvidia, which is a US-based multinational technology company that specializes in designing graphics processing units for the gaming and professional markets and making chip units, said it is confident the deal should be allowed to go ahead and that it would be good for the industry.

Jensen Huang, Nvidia's chief executive, said in a letter to the newspaper that claims from rival companies that Nvidia would block Arm from selling its products to other companies were preposterous.

"I can unequivocally state that Nvidia will maintain Arm's open licensing model," he wrote in the letter. "We have no intention to 'throttle' or 'deny' Arm's supply to any customer."

Companies have raised concerns about the deal because Arm-designed low-power chips are used in almost all smartphones on the market today and in many other technologies.

The proposed purchase of the Cambridge-based company was first made public in September 2019, when SoftBank Group, the owner of Arm Holdings said it hoped the sale would be completed in March 2020.

After a backlash from companies that purchase large quantities of Arm chips, and with the US and Chinese regulators announcing probes into the situation, the two companies subsequently set aside an 18-month window during which they hope to deal with questions from the authorities before completing the deal, the Financial Times reported.

Neither the UK's Competition and Markets Authority nor its EU counterpart has said how long they might need in order to conduct the probe.

The business news service Bloomberg notes that the deal, should it be allowed to proceed, would be the semiconductor industry's largest-ever.

In addition to looking at whether the proposed purchase would break any competition rules, the BBC reports that Oliver Dowden, the nation's digital, culture, media and sport secretary, will order a separate probe into whether the deal might have any implications for national security.

London is also understood to want guarantees from Nvidia about the number of jobs that would remain in the UK if the deal were allowed to go ahead.

Nvidia said in a statement it believes the proposed purchase would be beneficial for the technology sector.

"This transaction is great for innovation and market competition," the company insisted. "We're confident that the regulators will see the benefits to the tech ecosystem."

The UK's Daily Telegraph said industry insiders believe the deal is unlikely to be stopped but that the two companies could be required to make concessions in order to get it approved.