Breaking: FTC Lawsuit Is A Major Hurdle For NVIDIA's Proposed Acquisition Of Arm
As we've discussed on many occasions since the initial announcement, NVIDIA is trying to buy Arm from current owner Softbank. Jensen Huang was confident that the deal would close by March of next year, but that's looking less and less likely as time goes on. First, the EU rejected NVIDIA's concessions and launched an extended investigation of the deal, and now, the US federal government is getting involved.
The Federal Trade Commission (FTC) filed suit today to block the acquisition on anti-trust grounds. In its public announcement, the FTC refers to the deal as "the largest semiconductor chip merger in history," and that's probably true. Holly Vedova, the director of the FTC's Bureau of Competition, says that the proposed deal would "distort Arm's incentives in chip markets, and allow the combined firm to unfairly undermine NVIDIA's rivals."
For its part, Nvidia has adamantly insisted that it would not interfere in Arm's operations, nor change its status as a neutral provider of processor technology to other companies. Clearly, the EU and the FTC are dubious of that declaration. The FTC specifically refers to Arm as the "Switzerland" of the semiconductor industry, and warns that NVIDIA's ownership will threaten that status despite the company's best intentions.
The FTC's primary complaint seems to be that Arm's licensees, many of whom are NVIDIA's rivals, share trade secrets and other sensitive information with Arm during the process of developing their own products based on Arm technology. NVIDIA's ownership of Arm would mean that Team Green gets access to other companies' trade secrets. As the FTC says, "the merged firm would have less incentive to develop innovations ... if they are likely to harm NVIDIA."
While the simple filing of the suit doesn't actually block the merger, the trial isn't even scheduled to begin until August 9th, 2022. If this merger does finally happen, it won't be for a long while yet, it seems.