Last year we learned that Nvidia was set to move forward with its plans to acquire chip designer Arm for an estimated $40 billion. However, after the FTC investigated competition concerns around the deal this year, it has filed a lawsuit to block the acquisition.
After Nvidia publicly shared it was pursuing the purchase of Arm, we saw Qualcomm and others share objections with the Federal Trade Commission and other commissions around the world.
The core concern from the FTC is that the acquisition would give Nvidia the “means and incentive to stifle innovative next-generation technologies, including those used to run datacenters and driver-assistance systems in cars.”
The Federal Trade Commission today sued to block U.S. chip supplier Nvidia Corp.’s $40 billion acquisition of U.K. chip design provider Arm Ltd. Semiconductor chips power the computers and technologies that are essential to our modern economy and society. The proposed vertical 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’s complaint alleges that the combined firm would have the means and incentive to stifle innovative next-generation technologies, including those used to run datacenters and driver-assistance systems in cars.
FTC Bureau of Competition Director Holly Vedova shared more in the announcement:
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.
More specifically, the FTC sees the potential merger as harmful to competition in three key areas:
- High-Level Advanced Driver Assistance Systems for passenger cars. These systems offer computer-assisted driving functions, such as automated lane changing, lane keeping, highway entrance and exit, and collision prevention;
- DPU SmartNICs, which are advanced networking products used to increase the security and efficiency of datacenter servers; and
- Arm-Based CPUs for Cloud Computing Service Providers. These new and emerging products leverage Arm’s technology to meet the performance, power efficiency, and customizability needs of modern datacenters that provide cloud computing services. “Cloud computing” refers to the increasingly popular computing business model in which large datacenter operators provide computing services remotely and/or directly offer computing resources for rent, as well as provide other support services to customers who can then run applications, host websites, or perform other computing tasks on the remote servers—i.e., “the cloud.”
There’s also the concern that Arm’s licensees – Nvidia’s “rivals” – including Apple would be forced to share sensitive information if the acquisition were to go through.
We’ll be keeping an eye on developments around this, but it looks like this could be a big challenge for Nvidia and Arm to overcome.
You can find the full FTC announcement here.
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