FTC sues to block Nvidia’s $40 billion acquisition of Arm

NVIDIA ARM

Back in September 2020, NVIDIA announced that it will acquire Arm from SoftBank for $40 billion. Since then, this deal has been facing scrutiny from government agencies around the world. Last night, FTC sued to block this acquisition. FTC felt that this proposed vertical deal would give NVIDIA control over the computing technology and designs that rival firms rely on to develop their own competing chips. FTC alleged that the proposed NVIDIA-ARM would have the means and incentive to stifle competition in the following three worldwide markets.

  • 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.”

“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. “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.”

Source: FTC

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