Court Battles

FTC sues Nvidia over $40 billion Arm acquisition

The Federal Trade Commission building in Washington, D.C., is seen on June 18.
Greg Nash

The Federal Trade Commission announced Thursday it was suing Nvidia over its $40 billion purchase of Arm, the largest acquisition of a semiconductor chip design company.

Arm, owned by Tokyo-based Softbank, produces designs and computing technology for semiconductor chips, which are used to power most tech devices, from Iphones and laptops to computer systems in most vehicles.

In a statement, the FTC argued that if the California-based Nvidia — which builds semiconductor chips — acquires Arm, it would gain an unfair advantage over its competitors.

“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, the Bureau of Competition director for the FTC.

“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,” Vedova wrote.

An FTC administrative judge is set to begin hearing arguments on the issue at a trial scheduled to begin on Aug. 9, 2022.

A spokesperson for Nvidia said in an email the company will “continue to work to demonstrate that this transaction will benefit the industry and promote competition.”
 
“NVIDIA will invest in Arm’s [research and development], accelerate its roadmaps, and expand its offerings in ways that boost competition, create more opportunities for all Arm licensees and expand the Arm ecosystem,” the spokesperson wrote.

The acquisition was announced last year, with both tech companies suggesting the merger would bolster innovation in the Artificial Intelligence field. Nvidia powers most AI employed in intelligent machines and computers, while Arm provides hardware and tech for AI development.

“AI is the most powerful technology force of our time and has launched a new wave of computing,” Jensen Huang, the founder and CEO of NVIDIA, said in a statement. “In the years ahead, trillions of computers running AI will create a new internet-of-things that is thousands of times larger than today’s internet-of-people. Our combination will create a company fabulously positioned for the age of AI.”

Nvidia’s major competitors are Intel and Qualcomm. The FTC argues the merger of Nvidia and Arm will stifle competition in the semiconductor chip market.

Inevitably, that will “harm millions of Americans who use Arm-based products” by giving “Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice,” the agency said.

The Hill has reached out to Arm for comment.

The Biden administration has moved to block the mergers of large companies that create anti-trust concerns and unfair advantages in their respective markets. Last month, the Department of Justice sued to block the merger of US Sugar and Imperial Sugar.

— Updated at 5:40 p.m.

Tags Arm court battle Federal Trade Commission lawsuit litigation NVIDIA

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