FTC sues to stop Nvidia’s ARM acquisition

$40 billion fabless semiconductor acquisition violates antitrust, says gov

The Federal Trade Commission (FTC) on Thursday sued to block Nvidia Corp’s acquisition of Arm from SoftBank. The move, first announced in 2020, has drawn sharp scrutiny on both sides of the Pacific and Atlantic. But the FTC’s move may put a stop to it altogether without changes. A trial before the FTC’s a administrative law judge is set to begin August of 2022.

The complaint alleges that the proposed merger would give Nvidia the ability and incentive to use Arm to undermine its competitors. The government says that will reduce competition, inflate prices and reduce innovation.

“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 FTC Bureau of Competition Director Holly Vedova 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 FTC’s 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 damaging effects on future innovations,” said Vedova.

Both businesses are significant players in the fabless semiconductor business, along with Qualcomm and Broadcom. Nvidia pioneered graphics processors at the turn of the millennium and designs chips used on graphics cards, 3D visualization technology and high performance compute systems.

Based in Cambridge, England, Arm Ltd. also designs processors. It has maintained an open licensing approach and counts Qualcomm, Intel and Samsung among its customers. Apple has maintained an Arm license for its chips since 2008, and now uses Arm architecture to power most of its product line.

Nvidia’s Arm buy would create “critical loss of trust”

U.S.-based Nvidia announced plans to acquire U.K.-based Arm from Japanese conglomerate SoftBank in 2020. The plan would have left SoftBank with a small ownership stake in Arm. Along with control of Arm’s IoT Services group. Nvidia hoped to close the deal in 2022, which looks increasingly unlikely.

In its complaint, the FTC alleges that Nvidia’s Arm acquisition will affect worldwide markets. Those include “High-Level Advanced Driver Assistance Systems for passenger cars,” DPU SmartNICs used for data center security and operational efficiency, and Arm-based CPUs for cloud computing service providers. 

The FTC noted that Arm is a neutral partner with its customers. Acquisition by a rival chipmaker would cause a “critical loss of trust by Arm and its ecosystem.”

Nvidia’s compute technology now populate data centers and cloud computing infrastructure. The company offers edge computing applications, Artificial Intelligence (AI) and Machine Learning (ML), High Performance Cluster (HPC) systems and more. Nvidia’s branded “GeForce Now” cloud gaming service runs on its edge resources. Nvidia recently upgraded the service for premium customers with “SuperPods,” each comprising more than 1,000 GPUs similar to those found in its RTX 3080 card. The company claims the SuperPods have more than 39 petaflops of graphics processing capability. 

Nvidia has its feet in the metaverse, too. Nvidia announced Omniverse earlier this year, its metaverse technology that allows enterprises to build virtual worlds. The platform lets engineers “create and simulate shared virtual 3D worlds” that are physically based. Physics are simulated with NVIDIA PhysX and the materials simulated with NVIDIA MDL, according to Nvidia founder and CEO Jensen Huang.

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