EU to investigate Nvidia’s $54b ARM bid

▶ Maker of graphics, AI chips offers ‘behavioral remedies’ for antitrust concerns

Nvidia’s $54 billion bid for British chip designer ARM is expected to face an extended EU antitrust investigation after concessions offered last week failed to address competition concerns, three people familiar with the matter said.

An EU investigation would be the second setback for Nvidia, coming two months after Britain’s antitrust agency warned that the deal for the country’s most important technology company could damage competition and weaken rivals.

The European Commission is scheduled to end its preliminary review on October 27 and a four-month investigation into the deal would now follow, the people told Reuters said.

A spokesperson for the commission declined to comment.

“The regulatory process is confidential. The transaction will help to transform Arm and boost competition and innovation, including in the UK,” Nvidia Corp, a US-based technology company, said.

The world’s biggest maker of graphics and artificial intelligence (AI) chips has offered “behavioral remedies” to the commission, the people said, without providing details.

Such remedies usually refer to pledges by companies to take measures aimed at preserving competition.

Nvidia has said it would maintain ARM as a neutral technology supplier in a bid to allay concerns from customers such as Qualcomm, Samsung Electronics and Apple.

The EU competition enforcer has not sought feedback from rivals and customers on the concessions, indicating that they were not sufficient, the people said.

Backers of the deal include ARM customers Broadcom, MediaTek and Marvell.

Nvidia forecast third-quarter revenue above Wall Street expectations in August as it benefits from a boom in demand.

The company estimated current-quarter revenue at $6.80 billion, plus or minus 2 percent. Analysts on average had expected $6.53 billion, according to IBES data from Refinitiv.

Nvidia also beat expectations for secondquarter revenue with a 68-percent rise to $6.51 billion.

Data center and gaming revenue stood at $2.37 billion and $3.06 billion, beating analyst estimates of $2.3 billion and $2.94 billion, according to Refinitiv data.

The company said second-quarter adjusted profit was $1.04 per share, versus estimates of $1.01 per share, according to Refinitiv data.

Investors have focused on whether Nvidia’s move to acquire ARM will withstand regulatory scrutiny and close by March of next year as Nvidia promised.

In a statement in August, Nvidia Chief Financial Officer Colette Kress said the company is still confident the deal will close.

“Although some ARM licensees have expressed concerns or objected to the transaction, and discussions with regulators are taking longer than initially thought, we are confident in the deal and that regulators should recognize the benefits of the acquisition to ARM, its licensees, and the industry,” she said.