Do you worry that the $54 billion acquisition of Arm, by Nvidia, could lead to higher prices and stifle competition in Europe? Fear not, as Nvidia are now offering concessions to the EU to ease their concerns.
This article will discuss why these concessions are vital for the future of technology in Europe. Discover why this groundbreaking deal could be allowed and how it could benefit us all.
Introduction
On Monday, October 19th 2020, Nvidia revealed that it had agreed with the European Commission to address competition concerns regarding its planned takeover of Arm Holdings for $54 billion. Nvidia stated that it plans to offer concessions to ensure that “Arm’s open-licensing model and the openness of its architecture are preserved” to alleviate the European Commission’s fears over reducing innovation should a monopoly form. Specifically, Nvidia has proposed ploughing €1 billion into an independant fund to promote research and innovation using Arm-based technologies (including those currently developed by Arm licensees) at universities and laboratories in EU member states.
In addition, Nvidia has also promised to remain true to Arm’s open-licensing model for five years following completion of the acquisition, as well as allowing other chipmakers access to its graphics processing unit designs. These concessions mark a major step forward in securing regulatory approval from the EU Competition Commissioner who has expressed particular concern over potential monopolisation since news of the deal broke in June 2020. The deal requires approval from regulators worldwide before completion can be achieved – however, should these conditions be met, Nvidia will likely become the new owners of one of the semiconductor industry’s most important players later this year or early 2021.
Nvidia offers EU concessions over $54 billion Arm deal
Nvidia, a leading gaming and artificial intelligence (AI) technology provider, announced a deal in 2020 to acquire ARM Limited for $54 billion. Nvidia plans to make the UK-based semiconductor company the center of its “computing for everyone” mission and expand its presence in cloud computing and the Internet of Things (IoT). In addition, the deal will give Nvidia more control over ARM’s technology, which powers smartphones from Apple Inc. and other tech giants.
To get approval from European Union authorities, Nvidia has offered concessions to allay competition concerns. These include a long list of commitments, from maintaining some ARM operations as separate entities to licensing its technology on fair, reasonable, and nondiscriminatory terms. This includes offering licenses to competing chip makers such as Intel or Qualcomm, reducing any perceived anti-competitive practices that lead to market abuse or distortions that would counter EU antitrust rules.
Additionally, NVIDIA promised not to break up ARM’s IP licensing operations or impose new contractual terms that discriminate against competitors without EU approval. Of course, the deal is still subject to regulatory approval. Still, these concessions should smooth out any issues with the proposed merger many have raised due to possible monopolistic behavior have been addressed throughout these terms set out by both parties involved in the acquisition process.
Benefits of the Nvidia-Arm Deal
The potential benefits of the Nvidia-Arm deal have been widely discussed since its announcement in September 2020. According to Nvidia, the deal will create a “world’s leading computing company,” They have promised to invest $1.5 billion over five years towards developing AI supercomputing capabilities within the UK and providing open access to Arm’s technology for European startups and universities.
Furthermore, Nvidia has committed to relying on European semiconductor manufacturers for its products and promised level playing field conditions for supplied from UK suppliers. This is expected to bring significant economic advantages to the region due to the local production of high-value computing components and services.
Nvidia has also formed an alliance with Softbank –the Japanese company that originally bought Arm– about research in robotics, self-driving cars, autonomous machines learning systems trained at scale, conversational AI and many other areas related with intelligent machines learning technology. This could further accelerate Europe’s involvement in artificial intelligence research and development projects and other sectors such as healthcare.
Additionally, it is expected that by constructing a computing platform based on Arm technology -as opposed to Intel or AMD- there will be an increase in efficiency and performance compared with existing CPUs while reducing power consumption by up too 15%. This could be critical gains given Europe’s current focus on moving away from fossil fuels and reducing emissions.
European Commission’s Antitrust Concerns
The European Commission has been investigating the potential implications of Nvidia’s proposed $54 billion takeover of chipmaker Arm. With concerns that such a deal could threaten competition in the market and impact innovation, the European Commission launched an in-depth investigation into the merger in February 2021.
Nvidia have now offered a concession package to address any antitrust worries EU regulators hold. This includes offering other chipmakers access to Arm’s technology fairly, reasonably, and non-discriminatory terms. Additionally, Nvidia proposes that Arm continue to provide licenses for its core technology on existing terms without raising costs or prices; commit to investing heavily in research and development; and commit not to limit Arm’s ability or incentive to sell technologies on a royalty-bearing basis.
These proposed measures have been offered as reassurance that there will be no negative effects on price, choice or quality for consumers resulting from this acquisition. The European Commission is now assessing these considerations and will decide whether they are sufficient for approval of the merger plans.
Nvidia’s Concessions to the EU
Nvidia has offered certain concessions to receive approval for its $54 billion acquisition of Arm Holdings from the European Union. On April 8, 2021, Nvidia proposed potential solutions to address concerns raised by the European Commission (EC) – the EU’s executive body.
Nvidia’s three-pronged concessions offer would commit to:
- Breaking up its current joint venture in AI and High Performance Computing with Intel.
- Providing non-discriminatory access to Arm’s current customer base.
- Ensure competition does not decrease over time due to this merger or other factors beyond Nvidia’s control.
Specifically, Nvidia stated that it will: make Arm’s technology and partner ecosystem available on fair and reasonable terms; respect restrictions imposed by customers due to regulatory requirements such as ITAR (the International Traffic in Arms Regulations); continue the growth of its own AI and HPC products but support those of rivals through launches of competing licensees; treat customers of NVIDIA GPUs and developers of software tools in a consistent manner as those using multi-source architectures (i.e., x86) by allowing them to access products made available under the same conditions; maintain Arm’s open business model allowing different parties to develop their own versions of the architecture so long as intellectual property rights are respected; not offer customers preferential pricing because they use or don’t use Arm’s technology or platform; provide customers with all necessary resources required for product creation across all architectures (including x86); provide a firewall within NVIDIA dedicated solely for supporting development on rival architectures like x86, PowerPC or Alpha/ARM — no funds from any other business operations will cross this firewall according to a Firewall Manager who reports directly to Nvidia Executive Management every quarter.
The EC is currently reviewing these proposals before deciding whether or not it will accept them as part of a full settlement leading toward approval for the merger.
Potential Impact of the Arm Deal
Nvidia’s $54 billion acquisition of the Arm Limited unit from Softbank is poised to significantly impact the tech industry, potentially changing how power and speed are balanced in computing devices. The deal could create a significant shift in chip technologies, combining Nvidia’s focus on Artificial Intelligence (AI) with Arm’s lead in mobile chip design.
The proposed acquisition is still subject to international approval from competition regulators and antitrust authorities. To address concerns that it would give it too much control over chip designs, Nvidia offered concessions for European regulators. These include ensuring that Arm remains an independent supplier of processor IP with no preferential treatment for any customers, such as Nvidia itself.
The concessions were enough to satisfy EU competition authorities as they recently accepted Nvidia’s offer and approved the merger without conditions. The deal has also been cleared by Australia, China, Israel, Japan and South Korea but still requires approval from other countries like Britain and U.S.
Conclusion
The Competition Commission of the European Union (EU) has concluded that Nvidia’s proposed acquisition of Arm Limited is unlikely to raise serious competition concerns, provided that appropriate commitments are implemented.
After an extensive investigation, the commission concluded that the proposed transaction creates significant consumer advantages and does not eliminate competitors in the CPU or GPU markets. Moreover, the EU found that Nvidia’s concessions addressed potential competition concerns about Arm’s high-performance computing ecosystem.
Overall, the European Commission conducted a comprehensive investigation acknowledging potential risks and possible competitive advantages associated with this deal. In conclusion, EU authorities expressed their satisfaction with the proposed commitments offered by NVIDIA and confirmed that they outweigh any potential competitive concerns raised by this transaction.
The decision marks a major milestone for NVIDIA and ARM’s $54 billion deal as it moves towards a final resolution.
Further Reading
If you are interested in learning more about Nvidia’s proposed acquisition of Arm, here are some additional resources to explore:
1. European Commission antitrust inquiry: Find information on the competition issues the European Commission is evaluating concerning the proposed merger.
2. Financial Times article: Read an independent evaluation of the potential implications of this deal for Europe’s tech sector, as well as an update on Nvidia’s progress in addressing EU concerns before executing the deal.
3. Verge report: Analyze why Europe might think closely about allowing the proposed deal, under what circumstances it could still be stopped, and how U.S.–China tensions could make this a bigger battle than one between EU regulators and Nvidia.
4. ARM Holdings website: Learn more about Arm and its role in developing intellectual property for use across a wide range of products from multiple companies worldwide.
tags = Nvidia, EU concessions, $54 billion, Arm deal, EU antitrust approval, filing nvidia european arm eu oct.whitebloomberg, European Commission, world’s biggest maker of graphics and AI chips
