US FTC Moves to Block Nvidia’s Acquisition of Arm
it was obvious that the deal would have to go through serious global regulatory challenges
On 3rd Decembebr, it was reported that the US Federal Trade Comission (FTC) is suing to block the acquisition of British chip technology provider, Arm, by the U.S. chip company, Nvidia in a deal worth more than USD 40 billion on fairly obvious competition grounds. When the deal was announced in September 2020, it was obvious that the deal would have to go through serious global regulatory challenges.
FTC is worried about the following three global markets where Nvidia competes using Arm-based products.
- 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.
Holly Vedova (FTC Bureau of Competition Director) commented on the proposed acquisition deal and said, “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. 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.”
Some semiconductor companies like MediaTek Inc., and Broadcom Inc., have supported the biggest semiconductor merger in the history; however companies like Qualcom have raised concerns over the deal saying Nvidia would have monopoly over the new technologies that these companies depend on and can have advantage over their future products.
Before Nvidia offered USD 40 million for the acquisition of Arm, Soft Bank – the parent company of Arm, had plans of filing an intitial public offering (IPO) for Arm. The revenue of Arm has surged to USD 1.46 billion in 6-months ended in September; however, it is not clear if Arm would raise anything close to USD 40 billion offered by Nvidia for the acquisition of the company.
The Nvidia-Arm merger was initially expected to take 18 months to complete or March 2022 to be more precise but it seems this will not be the case now. FTC expects the administrative trial to begin on August 9, 2022.