The Federal Trade Commission has filed a lawsuit to block the acquisition of Arm by Nvidia, the semiconductor design company, saying the successful deal would unfairly stifle competition.
“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,” said Holly Vedova, director of the FTC’s competition bureau, in a statement. “The technologies of tomorrow depend on preserving today’s competitive and cutting edge chip markets. This proposed deal would distort Arm’s incentives in the chip markets and allow the combined company to unfairly undermine Nvidia’s competitors.
Nvidia first announced plans to acquire Arm in September 2020. At the time, the deal was worth $ 40 billion, but since then Arm’s share price has skyrocketed and the cost of the cash and stock transaction rose to $ 75 billion. The FTC lawsuit threatens to scuttle the deal altogether.
“As we enter 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 told Ars. “Nvidia is committed to preserving Arm’s open licensing model and ensuring that its intellectual property is available to all interested licensees, current and future. “
The FTC is not the first government regulator to review the deal. In October, the European Union announced it was investigating the acquisition, and last month British officials said they feared the merger could threaten both competition and national security. Chinese regulators are also studying the deal, Nvidia said.
Much of the angst surrounding the acquisition stems from the fact that, for most of its history, Arm has been a relatively neutral player in the semiconductor world, providing access to its intellectual property to almost anyone. person willing to pay the license fee. In the complaint, the FTC called Arm a “Swiss” in the semiconductor industry. Customers fear that an arm controlled by Nvidia could put them at the mercy of a competitor, while regulators fear the acquisition could threaten to overthrow a massive and thriving ecosystem that depends on architecture.
Arm started out as a niche semiconductor designer, delivering low-power chips for embedded systems and for portable devices like Apple Newton and Palm Pilot. Over the years, as the performance of ARM chips improved and the importance of power efficiency increased, semiconductors have found their way into a wider range of devices.
Today, Arm’s designs and instruction sets are widely used, appearing in everything from cell phones and servers to automotive airbag controllers and supercomputers. Recently, ARM chips have started to make inroads into the PC world, increasing the pressure on incumbents Intel and AMD. Apple’s M1 chips have shown just how competitive architecture can be with x86 designs, and others have started to follow suit. Earlier this week, Qualcomm announced a new Snapdragon processor, the awkwardly named 8cx Gen 3, that would run an ARM-specific version of Windows.
ARM eats the world
Because the ARM architecture is low power and available to so many different businesses, chips have taken the industry by storm. Last year, companies sold 25 billion ARM chips, an increase of more than four times since 2010.
Nvidia has also become an increasingly powerful player in the semiconductor world. Its graphics cards became key tools in machine learning and other artificial intelligence applications, and the company quickly began selling chips suitable for high performance computing. His Tegra mobile chips, which authorize Arm’s designs, powered a series of Tesla smartphones and infotainment systems in the mid-2010s, and they now work inside Nintendo’s Switch.
Jensen Huang, CEO of Nvidia, has made it clear that he hopes to gain a foothold in more corners of the IT market. “Starting with computer graphics, the reach of our architecture has reached deeply into the world’s largest industries,” he said at a company conference last month. “We start with amazing chips, but for every science, industry and application area, we create a complete stack. “
These ambitions have stumbled, however, in a changing antitrust landscape. Since Lina Khan was appointed president of the FTC, the agency has taken a stronger stance on mergers and acquisitions. The full complaint is not yet available, but an administrative trial is scheduled for May 10, 2022.