The US Federal Trade Commission (FTC) has filed a suit to block Nvidia’s acquisition of Britain-based chip design firm Arm, claiming it as unfair as the proposed deal would stifle the innovative next-gen technologies.
“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,” Holly Vedova, director of the FTC’s competition bureau, 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.”
The deal, which was worth $40 billion, was first announced in September 2020 by Nvidia. But since then, Arm stock price has soared to $75 billion in cash and stock transaction. The deal was earlier opposed by the EU, and UK and with US joining them now. The FTC lawsuit threatens to scuttle the deal entirely.
The FTC argued that the Arm licensees ‘routinely share competitively sensitive information with Arm’. Some of these companies are rivals to Nvidia like Qualcomm, Samsung and Apple. The proposed deal will likely decrease the incentive for Arm to pursue innovations, said the commission adding that it sees as conflicting with the company’s own business interests.
Despite the lawsuit, Nvidia continued to defend the deal. It said that it will invest in Arm’s R&D and expand its offerings. It said that the investment will be ‘in ways that boost competition (and) create more opportunities for all Arm licensees’ and is committed to preserving Arm’s open licensing model and ensuring that the IP remains available to all interested parties.
