FTC is Suing NVIDIA to Stop Its $40B Acquisition of Arm Amidst Concerns of Potential Reliance from Rival Firms Should Deal Push Through

Urian B., Tech Times 02 December 2021, 05:12 pm

The Federal Trade Commission or FTC is suing NVIDIA in hopes of blocking its $40 billion acquisition of Arm from SoftBank due to antitrust concerns. This deal has faced quite the amount of scrutiny from regulators ever since its announcement in 2020.

FTC is Trying to Stop NVIDIA's Acquisition of Arm

The United States' FTC action is the biggest hurdle that NVIDIA's deal has faced as of the moment, and it threatens whether the deal will be actualized in the future. As per the FTC announcement, the proposed vertical deal gives (NVIDIA) one of the largest chip companies control over the computing technology and designs that other rival firms heavily rely on in order for them to complete their own chips.

According to the story by CNBC, NVIDIA stock went up by 2% before the announcement but didn't budge significantly amidst the news. The FTC complaint has actually not yet been publicized.

Why is Arm so Important?

Arm is known as a core supplier of architecture technology for a lot of semiconductor companies. Its own Arm instruction set is present at the core of almost all mobile processors that are powering smartphones like those made by Apple and Android devices using Qualcomm chips.

Arm's role in the chip industry was historically being a neutral supplier. With the new NVIDIA acquisition, the potential deal is raising concerns that the company could potentially decide to cut off competitors from purchasing essential Arm technology.

NVIDIA Uses Arm-Designed Cores

A number of NVIDIA's own processors are also using Arm-designed cores as well as Arm architecture. The company, however, is still best known for its GPUs that use a different type of architecture.

The FTC gave a statement saying the complaint alleges that a merger would provide NVIDIA with the ability and incentive to make use of its control of the much needed technology to undermine its competitors. To add, this could provide NVIDIA the power to reduce competition which would result in lower product quality, higher prices, reduced innovation, and fewer choices for consumers.

FTC on Arm's Licenses

The FTC noted that Arm's licenses, which also include competitors of NVIDIA, share very competitive information with the tech firm. With that, the FTC lawsuit is focusing mainly on chips for driver assistance, networking products, as well as Arm microchips that are being used for cloud servers.

The FTC announced that they have come up with a unanimous vote to issue the complaint against NVIDIA's $40 billion acquisition of Arm. The Arm deal has also been receiving scrutiny from overseas as well.

In fact, the FTC isn't the only party looking into the acquisition deal, as the European Commission announced that they would be launching an in-depth investigation directly into the deal in October. News of the acquisition came just a little after an article by TechTimes revealed that NVIDIA is planning to invest $6.9 billion up to 2023 to help fight the global chip shortage.

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Written by Urian B.