The FTC Sues Nvidia to Block Its Historic Deal With Arm

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federal trade The commission has sued to block Arm’s acquisition of semiconductor design firm, Nvidia, saying the blockbuster deal would unfairly affect competition.

“The FTC is suing to block the largest semiconductor chip merger in history to prevent the chip group from stifling the innovation pipeline for next-generation technologies,” Holly Vedova, director of the FTC’s Bureau of Competition, said in a statement. ” “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.”

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nvidia first announced Its intention to acquire Arm in September 2020. At the time, the deal was worth $40 billion, but since then, Arm’s stock price has soared, with cash and stock transaction costs rising to $75 billion. The FTC lawsuit threatens to scuttle the deal altogether.

“As we move through this next step in the FTC process, we will continue to work to demonstrate that this transaction will benefit the industry and encourage competition,” an Nvidia spokesperson told Ars. “Nvidia is committed to preserving Arm’s open licensing model and ensuring that its IP is available to all interested licensees, current and future.”

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The FTC isn’t the first government regulator to investigate the deal. In October, The European Union announced that it was investigating the acquisition, and last month UK officials They said they were concerned that the merger would threaten both competition and national security. Nvidia said Chinese regulators are also looking into the deal.

Much of the anger surrounding the acquisition stems from the fact that, for much of its history, Arm has been a relatively neutral player in the semiconductor world, providing access to its intellectual property to almost anyone willing to pay a licensing fee. does. In the complaint, the FTC called Arm the “Switzerland” of the semiconductor industry. Customers fear that an Nvidia-controlled arm would put them at the mercy of a competitor, while regulators worry that the acquisition would risk destroying the largely thriving ecosystem that depends on the architecture.

Arm began as a niche semiconductor designer, offering low-power chips for embedded systems and for portable devices such as the Apple Newton and Palm Pilot. Over the years, as the performance of ARM chips improved and the importance of energy efficiency grew, semiconductors found their way into a wide range of devices.

Today, Arm’s designs and instruction sets are widely used, appearing in everything from mobile phones to servers, automotive airbag controllers, and supercomputers. Recently, ARM chips have begun to make inroads into the PC world, increasing the pressure on Intel and AMD. Apple’s M1 chips showed how competitive the architecture can be with x86 designs, and others have begun to follow suit. Earlier this week, Qualcomm announced a new Snapdragon processor, oddly named the 8cx Gen 3, that would run an ARM-specific version of Windows.

Since the ARM architecture is low-powered and available to many different companies, chips have taken over the industry. Last year, the companies sold 25 billion ARM chips, a more than fourfold increase since 2010.

Nvidia has also become an increasingly powerful player in the semiconductor world. Its graphics cards became important tools in machine learning and other artificial intelligence applications, and soon the company began selling analog chips. high performance Computing, Its mobile Tegra chips, which license Arm’s designs, powered a range of smartphones and Tesla infotainment systems in the mid-2010s, and today they run inside Nintendo’s Switch.

Nvidia CEO Jensen Huang has clarified that he expects to move into more corners of the computing market. “Starting with computer graphics, the reach of our architectures extends deeper into the world’s largest industries,” he said in a company keynote last month. “We start with amazing chips, but for each area of ​​science, industry, and application, we build a full stack.”

However, those ambitions have stumbled amid a changing antitrust landscape. Since Leena Khan was appointed chairman of the FTC, the agency has taken a more forceful approach towards mergers and acquisitions. The full complaint is not yet available, but an administrative trial is scheduled for May 10, 2022.

This story originally appeared on Ars Technica,


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