FTC wants to put a stop to Nvidia's $40 billion acquisition of Arm

FTC wants to put a stop to Nvidia’s $40 billion acquisition of Arm

By

FTC moves to block Nvidia's acquisition of Arm
The move would "distort Arm's incentives," the FTC said.
Image: Arm/Nvidia/Cult of Mac

The U.S. Federal Trade Commission has filed a lawsuit to block Nvidia from acquiring Arm. It believes the move would “distort Arm’s incentives in chip markets” and allow the combined firm to “unfairly undermine Nvidia’s rivals.”

Nvidia is already one of the largest chip companies in the world, while Arm’s technology is licensed to some of the biggest and most powerful brands, including Apple, Samsung, and Qualcomm.

FTC moves to stop Nvidia buying Arm

Nvidia’s decision to buy Arm, which is currently owned by SoftBank, for $40 billion was announced last September. Jensen Huang, Nvidia founder and CEO, said the move would bring “tremendous benefits for both companies.”

That may be the case, and it’s easy to see why Nvidia — which also licenses Arm technologies for its own chips — would be willing to spend so much money on the acquisition. But the FTC thinks other companies will lose out.

“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 Bureau of Competition Director Holly Vedova.

“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.”

Qualcomm wasn’t happy

It’s not clear what Apple’s opinion of the acquisition was because it is yet to comment on it publicly. But Qualcomm was against it, and it voiced its concern to the FTC — and a number of other regulators — back in February.

Qualcomm is worried that the merger would make Nvidia a gatekeeper of Arm technologies, and that it could prevent other companies, particularly those in direct competition with Nvidia, from using those they’ve long relied on.

The Snapdragon chip-maker believes that restricting Arm’s technology is the only way Nvidia would have been able to make the $40 billion deal profitable.

It is believed Apple’s partnership with Arm was largely safe anyway, thanks to its perpetual license to the Arm instruction set — which it needs to make A-series and M-series chipsets for its products — which cannot be revoked.

Watch out for the FTC

Vedova wants this lawsuit to serve as “strong signal” that the FTC will “act aggressively to protect our critical infrastructure markets from illegal vertical mergers that have far-reaching and damaging effects on future innovations.”

You can read the full statement on the FTC website.