Qualcomm Inc. believes Nvidia Corp.’s proposed $40 billion acquisition of Arm Ltd. could harm competition in the chip industry, according to a new report.

Publicly traded Qualcomm is a major supplier of smartphone processors. It also makes chips for many other systems ranging from virtual reality headsets to connected vehicles. 

Citing sources familiar with the matter, CNBC reported today that Qualcomm has shared objections to the proposed Nvidia-Arm deal with multiple regulatory bodies worldwide. The company reportedly communicated its concerns over the acquisition’s potential market impact to the U.S. Federal Trade Commission, the European Commission, the U.K.’s Competition and Markets Authority and China’s State Administration for Market Regulation.

Bloomberg also reported that Google LLC and Microsoft Corp. and asking antitrust officials to get involved, and at least one of them wants the deal killed, according to Bloomberg’s sources.

U.K.-based Arm makes processor blueprints that many chipmakers, including Qualcomm, use as the basis for their products. Qualcomm, according to CNBC’s sources, believes that there’s a “very high risk” Nvidia could prevent other chip makers from accessing Arm intellectual proprietary in the event the deal is approved. One of the sources elaborated that Qualcomm is of the view Nvidia wouldn’t be able to fully capitalize on the $40 billion deal “without crossing certain lines.”

The FTC, it’s believed, is already moving to take a closer look at the proposed acquisition.

Two of the sources who spoke to CNBC said the FTC has quietly advanced its review of the deal to a “second phase” with the potential to last a significant amount of time. Officials from the agency are said to have asked Nvidia, Arm and SoftBank Group Corp., Arm’s current owner, to provide additional information for the investigation. It’s believed that the companies could take months to prepare the requested documents.

FTC officials are also expected to seek feedback from other firms that may have information useful for the review, the sources were cited as saying. One of the tipsters said Nvidia and Arm can expect a “very thorough, a very painful, and a very long investigation.”

In a statement responding to the report, an Nvidia spokesperson said today that “as we proceed through the review process, we’re confident that both regulators and customers will see the benefits of our plan to continue Arm’s open licensing model and ensure a transparent, collaborative relationship with Arm’s licensees.”

For Nvidia, getting the acquisition approved would provide a major boost to its expansion efforts. Arm is a major player in segments such as the central processing unit market where Nvidia currently lacks a significant presence. That’s a detail Nvidia hopes will also help convince regulators to approve the deal: The company previously said that because it mostly competes in different markets than Arm, the merger wouldn’t reduce competition in those markets.  

Today’s report comes about a month after the U.K.’s Competition and Markets Authority announced an antitrust probe into the proposed $40 billion acquisition. The investigation is set to focus on the same key question over which Qualcomm has reportedly voiced concerns. Specifically, the watchdog said it would examine whether Arm will have an “incentive to withdraw, raise prices or reduce the quality of its IP [intellectual property] licensing services to Nvidia’s rivals” in the event the transaction is approved.

Photo: Qualcomm