Dec 2, 2021 - Technology

FTC sues to block Nvidia's $40B Arm acquisition

The words "Arm" and "Nvidia" against a grey background with the Nvidia logo in the middle.

Image: Nvidia

The Federal Trade Commission sued to block the chip supplier Nvidia's $40 billion acquisition of U.K. chip designer Arm, arguing the deal would give Nvidia too much control over the technology and designs its competitors rely on.

Why it matters: Arm's chip designs are used in phones, tablets, game consoles and by companies including Apple, Samsung and Qualcomm.

Driving the news: The complaint from the FTC, approved unanimously and announced on Thursday, argues that because Arm's designs are a critical input that enables competition between Nvidia and its rivals, the deal would give Nvidia the ability to undermine its competitors.

  • This could lead to reduced innovation, higher prices and less choice, the FTC argues.
  • Specifically, the FTC says the deal would hurt competition in three markets in which Nvidia competes: advanced driver assistance systems, networking products and in cloud computing.

What they're saying: "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,” FTC Bureau of Competition Director Holly Vedova 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 other side: Nvidia said it would keep Arm's open licensing model when the deal was announced.

  • "As we move into this next step in the FTC process, we will continue to work to demonstrate that this transaction will benefit the industry and promote competition," an Nvidia spokesperson said in a statement.

Be smart: Arm doesn't make chips itself, but rather creates underlying designs that are widely used in everything from phones to networking gear to cars.

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