FTC Sues to Block Sale of Arm to Nvidia

The U.S. Federal Trade Commission (FTC) today sued to block Nvidia’s $40 billion acquisition of chip designer Arm, citing competitive concerns.

“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,” FTC Bureau of Competition Director Holly Vedova said. “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.”

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Nvidia announced its intention to purchase Arm from Softbank for about $40 billion, over one year ago, in September 2020. But the deal fell under immediate criticism from the major industry players that rely on Arm’s chipset designs, and the UK government announced in April that it would “intervene” for national security reasons. In August, Nvidia admitted that the acquisition, which it had hoped to finalize by the end of 2021, would likely be delayed.

Now, it may not happen at all.

“We will continue to work to demonstrate that this transaction will benefit the industry and promote competition,” Nvidia said, adding that it would contest the FTC lawsuit.

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Conversation 36 comments

  • christianwilson

    Premium Member
    02 December, 2021 - 4:46 pm

    <p>I understand the concern, but if not Nvidia or one of their competitors, who would be a good parent company for ARM? </p>

    • lvthunder

      Premium Member
      02 December, 2021 - 4:57 pm

      <p>No one. That’s the point. The people against this want ARM to be a stand-alone company.</p>

    • hrlngrv

      Premium Member
      02 December, 2021 - 7:11 pm

      <p>If ARM processors are used by MANY independent hardware makers, does it make sense for ANY of those hardware makers to own ARM?</p>

    • bkkcanuck

      02 December, 2021 - 9:51 pm

      <p>They could have done an IPO, there is no need to be acquired by anyone else.</p>

      • wright_is

        Premium Member
        03 December, 2021 - 2:16 am

        <p>Softbank took a bath on some of its (I believe mainly Chinese) investments last year, they were looking to quickly sell off ARM, which is one of their strongest investments, to make up the shortfall.</p>

        • bkkcanuck

          03 December, 2021 - 9:11 am

          <p>Actually, he came into a good chunk of money based on his Chinese investment (Alibaba) and then apparently thought he was an investing genius with spectacular failures which I could only shake my head at… WeWork is the one I am still shaking my head at… it was basically a glorified real estate play at valuations like it was a .com business, then there is Uber which is a constant money drain… Not saying they are not bad business ideas, but buying high and selling low is not the best strategy.</p>

        • bkkcanuck

          03 December, 2021 - 9:15 am

          <p>Post decision to sell ARM to cover those losses, he has had some other lead eggs that are in the Chinese market (hit by crackdown on tech companies)… So his losing streak is continuing. </p>

    • wright_is

      Premium Member
      03 December, 2021 - 2:17 am

      <p>It is a highly profitable, independent entity, why does it need to be owned by any chip maker?</p><p><br></p><p>Softbank are only trying to divest their investment because they took a bath elsewhere and ARM is one of their most valuable investments.</p>

      • christianwilson

        Premium Member
        03 December, 2021 - 6:23 am

        <p>You are right, of course. It isn’t necessary for ARM to be owned by anyone. I was looking at it from the perspective that SoftBank didn’t spin it off and instead was looking for someone to buy.</p><p><br></p><p>I agree the best option is for ARM to become independent and maybe that will happen now. </p>

        • bkkcanuck

          03 December, 2021 - 12:21 pm

          <p>That is only because Softbank was trying to sell off profitable operations to raise money quickly — not sure they needed money quickly or whether they wanted it to cover the losses for financial reporting reasons (cut the size of the reported losses overall). The IPO process is not a quick process, it could take years of a company becoming ready before the IPO… the funny thing is with all these roadblocks – it might have actually been quicker. IPO for a solid company (like ARM) at the right time could actually raise more money than a straight sale. </p>

  • lvthunder

    Premium Member
    02 December, 2021 - 4:59 pm

    <p>Elections have consequences. This administration is so anti-business</p>

    • jchampeau

      Premium Member
      02 December, 2021 - 6:34 pm

      <p>The five FTC commissioners each serve seven-year terms and neither party can have more than three. Four of the five current commissioners’ terms began in 2018, and for those keeping score at home, this means they were nominated by Trump.</p>

      • hrlngrv

        Premium Member
        02 December, 2021 - 7:15 pm

        <p>Could a POTUS appoint 3 commissioners from his own party and 2 who are members neither of his own party nor the main opposition party? That is, could there be 3 Republicans and 2 Libertarians? Or 3 Democrats and 2 Greens?</p>

        • jchampeau

          Premium Member
          03 December, 2021 - 7:00 am

          <p>I’m not sure. Why don’t you ask him? I presume the answer will no since one of the people Trump nominated is a democrat, and because if it were possible, it would go against the spirit of the rule which is intended to ensure the FTC remains independent and can do its job without political influence and interference.</p>

    • evictedkoala

      02 December, 2021 - 8:31 pm

      <p>You mean pro consumer and common sense. Some of you are just itching for a 100% corporate fascist state vs the 90% one we have now, all in the name of an immature definition of what freedom and liberty in a working society actually are.</p>

      • lvthunder

        Premium Member
        02 December, 2021 - 10:11 pm

        <p>No, I mean anti-business. You can’t be pro-consumer if you are damaging where everyone works. So how would Nvidia acquiring ARM harm consumers? It’s not like Nvidia is a huge company.</p>

        • wright_is

          Premium Member
          03 December, 2021 - 2:24 am

          <p>nVidia is a huge company. They are one of the biggest graphic cards makers, they make ARM chips for everything from vehicles and IoT up to servers. They have nearly 20,000 employees, that seems to make them a large company, they are most definitely not an SME.</p><p><br></p><p>The harm to consumers is the fear that nVidia will syphon of the best bits of ARM for themselves, leaving everybody else at a disadvantage. This is why the merger has either been rejected or is under close scrutiny pending a decision in many countries. The UK and EU have already put the blockers on, for instance, the US is actually late to the game.</p>

        • bkkcanuck

          03 December, 2021 - 2:43 am

          <p>nVidia is not a small company, and it is not a company that is compatible with the business model that ARM works under (which is a licensee of technology or IP for other companies to make chips). nVidia is a closed proprietary company which directly competes with many of the companies who are licensees of ARM technology. The chip market itself is not rife with competition, it has very much consolidated over the last 30 years. ARM is the licensee of technology behind around 6+ billion chips that are made very year for devices ranging from CPUs in the largest supercomputers to IoT devices. Further consolidation which affects such a wide spectrum of other companies and further consolidation that threatens consumers — has to be looked at very carefully. It is why the UK/EU and the US anti-trust regulators are taking a very close look at it (it was understood to be a high likelihood when the deal was announced). It might not be pro-nVidia or pro acquiring company, but antitrust regulators are not there to protect acquiring companies – it is to ensure open and vibrant competition is maintained in the marketplace and that it is not harmed. It would not have been a good idea for many companies, including Apple who use to own a large portion of ARM (and nVidia) to be allowed to buy out ARM as there is a significant risk to market competition. You would be combining nVidia who is the largest (by far) making of GPUs which are used in datacenters and for AI purposes (and proprietary) — with the largest open licensee of CPUs. That is not a risk that the antitrust regulators can afford to take IMHO.</p>

        • bkkcanuck

          03 December, 2021 - 5:00 am

          <p>BTW, nVidia is 4 times as large as Intel by Market Cap ($800+ billion vs $200+ billion).</p>

        • JoePaulson

          03 December, 2021 - 12:12 pm

          <p>You make no sense…at all. You are letting your politics decide what you consider facts rather than rational thought.</p>

    • wright_is

      Premium Member
      03 December, 2021 - 2:19 am

      <p>Why anti-business? The EU, the UK and many other monopolies &amp; mergers boards around the world are against this as well.</p><p><br></p><p>ARM is a hugely profitable business that doesn’t need to be owned by another entity and the industry would be better off with them being independent. </p>

    • JoePaulson

      03 December, 2021 - 12:11 pm

      <p>Preventing further concentrations of resources is not anti-business. FFS The government is not supposed to just rubber stamp mergers. </p>

  • blue77star

    02 December, 2021 - 8:39 pm

    <p>Only in corrupted Federal Government. Government overreach goes beyond joke.</p>

    • wright_is

      Premium Member
      03 December, 2021 - 2:27 am

      <p>Why? </p><p><br></p><p>Most of the rest of the world has already put a veto on the plans anyway or are closely investigating the planned merger. The FCC is just reiterating what many other countries have already said.</p><p><br></p><p>It is potentially bad for business, bad for competition and bad for consumers. The UK also want to keep ARM in the UK / away from US influence, because it is a key asset in the UK defence industry and don’t want it ending up being blocked from use by UK defence contractors, for example.</p>

      • wright_is

        Premium Member
        03 December, 2021 - 2:28 am

        <p>That being said, they probably should have made that decision at the time it sold to Softbank…</p>

    • JoePaulson

      03 December, 2021 - 12:09 pm

      <p>LOL…you think it’s corrupt to block a merger that will result in one customer of ARM to own the rights and IP for an entire industry?</p>

  • RobertJasiek

    03 December, 2021 - 1:17 am

    <p>So I understand that the UK could consider to intervene because ARM Ltd. is a UK company, and the USA or California might intervene because Nvidia is registered in California (USA).</p>

  • hellcatm

    03 December, 2021 - 1:25 am

    <p>So why block this but they let AT&amp;T buy WB and DirecTV. They also let Spectrum buy Comcast. Is this worse than those? I don’t think so. I’m not saying they’re wrong, but they were wrong saying yes to many other mergers.</p>

    • wright_is

      Premium Member
      03 December, 2021 - 2:30 am

      <p>Because this is of international importance. Many other jurisdictions have already put the kibosh on the deal, for national security (UK), consumer choice or competition reasons. The US was the only major power that hadn’t spoken out against the merger.</p><p><br></p><p>Whether the FCC gives it a pass or not, it is already blocked. This is more about face-saving on the part of the FCC.</p>

    • JoePaulson

      03 December, 2021 - 12:07 pm

      <p>Because the FTC is no longer managed by pro-monopoly idiots?</p>

      • Donte

        03 December, 2021 - 3:01 pm

        <p>Just idiots in general now.</p>

    • Donte

      03 December, 2021 - 3:01 pm

      <p>This is way bigger than those mergers. This will have a global impact. NVIDIA plays aggressive hardball all the time with the video card industry to dominate it. ARM chips are used in so many devices globally that they could impact so many things in our lives if they use the same tactics as they do with the market manipulation they do with video cards. </p>

  • dftf

    03 December, 2021 - 8:15 am

    <p>Anyone else having an issue creating a new Forum Post on here? I’ve made-sure all cookies are allowed, and I’ve no-blockers running for this page, but I just keep getting "Shoot, we can’t find the page you’re looking for!"</p>

    • bkkcanuck

      03 December, 2021 - 8:41 am

      <p>Yes, always lots of problems.</p>

  • roykirk

    03 December, 2021 - 2:38 pm

    <p>If the FTC ever sues to break up broadband monopolies, then I might take them seriously.</p>

  • ivarh

    Premium Member
    09 December, 2021 - 7:10 am

    <p>I have no idea why FTC would stop this but I can understand why the English/EU want to stop it. </p><p>Its been worrying watching the US from the outside and their "unstable" politics. If ARM gets owned by a US company the rest of the world risks that a future administration does to a random another country what they did to China and blocks their use of ARM. If there is one thing Mr 45 have shown us (in the rest of the world) is that the US is capable of electing anyone regardless of stability to be their leader.</p>

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