Last year, NVIDIA announced its intention to acquire ARM. ARM is the company that licenses its chips design to other companies such as Qualcomm and Apple who then make chips based on their architecture. Last year when NVIDIA offered $40 billion to acquire ARM, it raised a lot of eyebrows. Recently, European Union tried to block the takeover, and now United States' Federal Trade Commission (FTC) is suing to block the merger from going through.
FTC says that the merger would “stifle competing next-generation technologies.” FTC says that ARM is a "critical input" that acts as a competition between NVIDIA and its rivals, but if the merger goes through, it would give NVIDIA a way to "undermine" those challengers.
FTC's Bureau of Competition director Holly Vedova in a statement:
“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. 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.”
FTC says that NVIDIA already uses ARM's architecture and designs for its products, such as chips and semiconductors for datacenters. But the commission also thinks that by acquiring ARM would give the company an unfair advantage. It also raises a concern that NVIDIA would gain access to sensitive information which could prove as a conflict of interest to the claim that NVIDIA intends to retain ARM's open licensing model. The official administrative trial is due to start August 9th, 2022.
NVIDIA has promised that it will retain ARM's open licensing model when it acquires the company. In a statement to the Financial Times, NVIDIA CEO Jensen Huang said that NVIDIA "will maintain Arm’s open licensing model. We have no intention to ‘throttle’ or ‘deny’ Arm’s supply to any customer." Furthermore, in a statement to The Verge, a spokesperson has said that NVIDIA "will continue to work to demonstrate that this transaction will benefit the industry and promote competition." The company has reiterated that it will retain the open licensing model. Instead, the company even goes on to argue that the merger will only "boost competition, [and] create more opportunities for all Arm licensees and expand the Arm ecosystem” thanks to Nvidia’s added resources.
Here's the full statement from NVIDIA (via Engadget):
"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 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."