The FTC is taking steps to block Nvidia’s $ 40 billion purchase of Arma through a lawsuit

Last year, we learned that Nvidia is ready to continue with its plans to buy Arma for chip design for an estimated $ 40 billion. However, after the FTC investigated concerns about competition over the deal this year, it filed a lawsuit to block the purchase.

After Nvidia publicly announced that it wanted to buy Arm, we saw Qualcomm and others share objections with the Federal Trade Commission and other commissions around the world.

Now that the FTC has completed its investigation, it has announced that it opposes the Nvidia / Arm deal and is suing it to block it (via The Verge).

The FTC’s primary concern is that the acquisition would give Nvidia “a means and incentive to stifle next-generation innovative technologies, including those used to run data centers and driver assistance systems.”

The Federal Trade Commission sued today to block the acquisition of US chip supplier Nvidia Corp. $ 40 billion from British chip design supplier Arm Ltd. Semiconductor chips power computers and technologies that are critical to our modern economy and society. The proposed vertical deal would give one of the world’s largest chip companies control over the computer technology and design that competing firms rely on to develop their own competing chips. The FTC’s complaint states that the combined company would have the means and incentive to stifle innovative next-generation technologies, including those used to run data centers and driver assistance systems.

FTC Competition Bureau Director Holly Vedova shared more in the announcement:

Tomorrow’s technologies depend on maintaining today’s competitive, high-end chip market. This proposed deal would distort Arm’s incentives in the chip market and allow the combined firm to unfairly undermine Nvidia’s rivals. The FTC 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 detrimental effects on future innovation.

More specifically, the FTC sees potential mergers as detrimental to competition in three key areas:

  • Advanced high-level driver assistance systems for passenger cars. These systems offer computer-assisted driving functions, such as automated lane change, lane retention, highway entry and exit, and collision avoidance;
  • DPU SmartNIC, which are advanced network products used to increase the security and efficiency of data center servers; i
  • Hand-based CPUs for cloud computing service providers. These new and new products use Arm’s technology to meet the performance, energy efficiency and adaptability needs of modern data centers that provide cloud computing services. “Cloud computing” refers to the increasingly popular computer business model in which large data center operators provide remote computer services and / or directly offer computer resources for rent, as well as provide other customer support services that can then run applications, host websites or perform other computer tasks on remote servers — ie. “easy”.

There are also concerns that the owners of Arm’s licenses – Nvidia’s “rivals” – including Apple, would be forced to share sensitive information if the acquisition passes.

We will follow developments around this, but it looks like this could be a big challenge for Nvidia and Arm to overcome.

The full FTC statement can be found here.

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Naveen Kumar

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