Objections mount to Nvidia’s acquisition of Arm

It was probably inevitable, but companies are urging federal regulators to intervene or even block Nvidia’s planned $40 billion purchase of Arm Holdings.

Google, Microsoft, and Qualcomm are among a number of companies concerned about whether they will continue to have equal access to Arm technology after the acquisition closes, according to both Bloomberg and CNBC. And CNBC goes so far as to ask regulators around the world to scuttle the deal altogether.

Earlier this month, UK-based AI chip start-up Graphcore asked the UK’s Competition and Markets Authority to block the acquisition. Graphcore isn’t even an Arm licensee, just an Nvidia competitor in the AI-processor space.

Before that, a group called Save Arm led by Arm co-founder Hermann Hauser popped up almost immediately after the deal was announced last year, urging British Prime Minister Boris Johnson to stop the deal.

The US Federal Trade Commission has opened an investigation into the acquisition and has asked SoftBank, Nvidia, and Arm to provide more information and also is asked for input from other companies that might have relevant information.

Qualcomm, Microsoft, Google opposed

The three known U.S. opponents of the deal all have vested but differing interests in Arm. For Qualcomm, it’s about IP as one of the largest Arm licensees in the world. For Microsoft and Google, it gets complicated.

“You have to look for the shared interest that all the large clients of Arm might have,” said Shane Rau, research vice president for IDC. Microsoft reportedly has custom Arm silicon for Azure, but it’s more than that, he said.

“You can consider Microsoft across whole-client, future Arm processors for Surface Pro and Azure processors for the data center. Google doesn’t have data-center silicon but they do have an interest on the Android side, making sure the client-side ecosystem is allowed to proliferate so there are more clients in the hands of humans that generate data that go thru Google data centers,” he said.

What this all comes down to is mistrust vs reality. Nvidia argued it would not spend $40 billion on Arm only to kill the goose that laid the golden egg by playing favorites and thus harming its customer relations.

Nvidia CEO Jen-Hsun Huang recently told the Financial Times, “I can unequivocally state that Nvidia will maintain Arm`s open-licensing model. We have no intention to ‘throttle’ or ‘deny’ Arm’s supply to any customer.”

Nvidia’s opponents, however, don’t seem to believe it and are assuming the worst from a company with no history of ever screwing a partner.

“It risks closing down or limiting other companies’ access to leading-edge CPU-processor designs which are so important across the technology world, from data centers, to mobile, to cars, and in embedded devices of every kind,” said Graphcore CEO Nigel Toon on CNBC last December.

Jon Peddie, president of graphics market research firm Jon Peddie Research, isn’t buying it. “Nvidia would be nuts to do such a thing, and I don’t think Nvidia is nuts,” he said. Qualcomm ships Arm-based chips in the billions, Nvidia ships Arm product in the thousands, he said. “What possible benefit could Nvidia get from withholding tech from its largest customer?”

That said, this isn’t false concern about Nvidia’s intentions, either. “I know its genuine. I’ve spoken with people at those companies. They are sincerely and genuinely concerned about this. They feel they are losing control of their destiny,” he said.

Nvidia could allay such concerns by givig visibility into its R&D work so clients can keep up with developments and issue warnings if they see potential negative effects.

Huang didn’t get this far without some serious negotiating skills, which he used back in 2019 to get China’s approval for Nvidia to buy Mellanox for $6.9 billion. “He understood their concerns, and what they were worried about, and was able to address them,” said Peddie.