Nvidia Arm64 purchase under in-depth investigation
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Last month, Nvidia bought Arm (the creator of open-licensing CPUs found in products from PCs to Arm64 chips in smartphones) for an eye-watering $40 billion. This is made up of $12 billion in cash, $21.5 billion in Nvidia stock, and $5 billion stashed under an earn-out clause. According to our legal correspondent (me), an earn-out clause gives Nvidia additional earning potential if SoftBank (Arms parent company) hits certain financial targets after the sale within a set timeframe.
Now The European Commission has opened an in-depth investigation regarding the purchase over contractor and third-party access to the Arm and Arm64 brands and products.
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President and CEO of Nvidia, Jensen Huang, made the following statement when the deal went live last month:
“Arm’s business model is brilliant. We will maintain its open-licensing model and customer neutrality, serving customers in any industry, across the world, and further expand Arm’s IP licensing portfolio. Nvidia will retain the name and strong brand identity of Arm”
Who wouldn’t believe a billionaire businessman, right? Whilst The European Commission isn’t worried about brands such as Arm and Arm64 disappearing as such, but how they will be handled by Nvidia. Their doubt is cast over whether Nvidia will continue to make Arm and Arm64 products accessible to third parties or restrict licensing access. This would artificially drive up the value of the Arm IP, which The European Commission thinks is a bit naughty, and rightly so.
How will The European Commission be conducting their investigation
The European Commission will be focusing on the impact of the deal on the following products currently made by Arm/Arm64:
- Data centre CPUs
- Smart Interconnects
- Chips in car infotainment/Driver-assistance systems
- High performance IoT devices
- Gaming Consoles
- PCs
Taking a deep looking into how these products are going to be licensed and managed now Nvidia is at the helm, looking for signs of Nvidia refocusing Arm into profitable areas of Nvidia’s portfolio. Although Nvidia can keep Arm as a separate entity, there’s nothing stopping them from directing development focus on products that best serve Nvidias interests. European Commission executive vice president Margrethe Vestager stated the following according to ZDNet:
“Our analysis shows that the acquisition of Arm by Nvidia could lead to restricted or degraded access to Arm’s IP, with distortive effects in many markets where semiconductors are used. Our investigation aims to ensure that companies active in Europe continue having effective access to the technology that is necessary to produce state-of-the-art semiconductor products at competitive prices.”
Ultimately, the European Commission is doing the right thing. Chip shortages have plagued not just home entertainment and gaming but car and medical equipment manufacture worldwide. Let’s hope this all get’s ironed out sooner rather than later. For all the latest on tech news, make sure to bookmark and check out the PC Guide News hub.
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