US Federal Trade Commission Challenges Nvidia’s $40 Billion USD Arm Acquisition

The US Federal Trade Commission wants to block Nvidia’s Arm takeover as it believes the combined company will stifle competition.

According to a press release from the FTC, Nvidia’s contentious acquisition of UK chip designer Arm is facing yet another roadblock as the Commission is suing Nvidia to block the deal.

The acquisition has been fighting an uphill battle since it was first announced more than a year ago, with concerns being raised by the UK’s competition watchdog and then later from the EU.

In the statement the FTC alleges that, “The proposed vertical deal would give one of the largest chip companies control over the computing technology and designs that rival firms rely on to develop their own competing chips.” In fact, the FTC opposes vertical integration of Nvidia and calls it a precedent of “an illegal vertical merger.”

The FTC said the deal would give Nvidia unlawful control over computing technology and designs that rivals need to develop their own competing chips. It fears the combined entity could stifle next-generation technologies used to run data centers and self-driving cars, among many others.

“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 by the commission.

“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,” Nvidia said in a statement. “Nvidia will invest in Arm’s R&D, accelerate its roadmaps, and expand its offerings in ways that boost competition, create more opportunities for all Arm licensees and expand the Arm ecosystem. Nvidia is committed to preserving Arm’s open licensing model and ensuring that its IP is available to all interested licensees, current and future.”

All that being said, Nvidia’s argument will be a tough case to make. The FTC said the decision to oppose the merger was unanimous, with all four commissioners voting against it. The administrative trial to determine the outcome of the case is set to begin on August 9, 2022.