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| Biden administration wants to prevent Nvidia from buying Arm |
Nvidia's $40 billion takeover of Arm faces new hurdles as the Federal Trade Commission announced it will take legal action to prevent the merger amid concerns that the combined company will stifle competition for the next generation of technology.
The lawsuit came after the Federal Trade Commission investigated the deal following complaints from Google, Microsoft and Qualcomm shortly after the merger was announced.
“The FTC is suing the largest semiconductor chip collapse in history to prevent chip conglomerates from stifling the next generation of technological innovation,” Holly Fedova, director of the Federal Trade Commission’s Office of Competition, said in a statement.
"Tomorrow's technology depends on the sustainability of today's highly competitive advanced chip market," she added. The proposed deal skewed Arm's share of the chip market and allowed the combined company to unfairly weaken Nvidia's competitors. The lawsuit from the Federal Trade Commission should send a strong signal that we are taking effective steps to protect our critical infrastructure market from illegal vertical mergers that have a profound and devastating impact on innovation in the future.
The FTC complaint noted that NVIDIA uses ARM-based products in several areas, including advanced payment systems for vehicles, ARM-based processors for cloud computing, and DPU SmartNIC (network products for data centers). The FTC fears that by acquiring Arm, Nvidia could gain an unfair advantage in these markets.
NVIDIA deal stifles competition for next-generation technology
In addition, the FTC fears that Nvidia will obtain access to sensitive information from Arm's licensees that compete with NVIDIA and discourages Arm from focusing on developing new products and designs that serve Nvidia's own interests in favor of its competitors.
For its part, Nvidia is committed to maintaining Arm's current open licensing model. This model enables the company to supply semiconductor designs to a large number of companies including Apple, Samsung, Qualcomm, Amazon, etc.
The Nvidia CEO wrote that his company has a clear and open licensing model. He stated that the company had no intention of killing a customer or refusing to ship an arm to the customer.
"We will continue to work to demonstrate that this transaction is beneficial to the industry and will improve competition," a company spokesperson said in a statement. The company also reiterated its commitment to maintaining Arm's open licensing model. and to ensure that intellectual property is within the reach of all current and future licensees.
It believes the merger will increase competition and create more opportunities for all ARM licensees. With resources from Nvidia, he's also expanded the arm's ecosystem.