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© Nvidia Business | December 03, 2021

The FTC wants to block Nvidia’s $40B acquisition of Arm

The US Federal Trade Commission has launched a lawsuit aiming to block U.S. chip supplier Nvidia Corp.’s USD 40 billion acquisition of UK chip design provider Arm Ltd. Semiconductor.

The proposed deal would give one of the largest chip companies “control over the computing technology and designs that rival firms rely on to develop their own competing chips,” the FTC says in a press release. The FTC argues that the combined firm would have the means and incentive to stifle innovative next-gen technologies, including those used to run datacenters and driver-assistance systems in cars. “The FTC is suing to block the largest semiconductor chip merger in history to prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies,” said FTC Bureau of Competition Director Holly Vedova, in a press release. “Tomorrow’s technologies depend on preserving today’s competitive, cutting-edge chip markets. This proposed deal would distort Arm’s incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals. The FTC’s lawsuit should send a strong signal that we will act aggressively to protect our critical infrastructure markets from illegal vertical mergers that have far-reaching and damaging effects on future innovations.” The FTC are not the only ones concerned with the proposed deal. On November 17, Evertiq reported that UK Digital Secretary, Nadine Dorries, had ordered the UK's Competition & Markets Authority (CMA) to carry out an in-depth Phase Two investigation of Nvidia's acquisition of Arm over competition and national security concerns. The deal was also dubbed as a “disaster” by Arm-cofounder Hermann Hauser, who argues that the deal should be blocked. While current Arm owner, SoftBank, stayed on course in regards to Arm’s open-licensing model and maintained its neutral stance on the market. Arm’s powerhouse status came with its decision to allow partners to develop their chips using company’s architecture; which later became an industry standard. The criticism of the deal is based on the fact that such a key supplier of licensing of designs and IP critical to the industry will fall in the hands of a competitor to the licensees. Because Arm’s technology is a critical input that enables competition between Nvidia and its competitors in several markets, the FTC’s complaint alleges that the proposed merger would give Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices and less choice. According to the complaint, the acquisition will harm competition in three worldwide markets in which Nvidia competes using Arm-based products. We are talking about ADAS systems for the automotive industry, CPU’s for Computing Service Providers and networking products such as DPU SmartNICs.
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June 21 2022 3:19 pm V20.6.1-2