The US Federal Trade Commission is suing to block Nvidia from buying UK chip design firm Arm, claiming the merger will be bad for competition.
According to the FTC, the deal would hand Nvidia too much power in the tech industry, given that Arm’s chip designs are used for all kinds of products, including smartphones, laptops, servers, and the driver-assistance systems inside cars.
As a result, the US regulator fears Nvidia could use Arm to undermine its competitors, which risks stifling innovation, raising prices across the industry, and depriving consumers of choice. Arm currently counts companies such as Apple, Qualcomm, and Samsung as customers through chip licensing agreements.
"Tomorrow’s technologies depend on preserving today’s competitive, cutting-edge chip markets. This proposed deal would distort Arm’s incentives in chip markets,” said FTC Bureau of Competition Director Holly Vedova in Thursday’s announcement.
“The (FTC’s) complaint also alleges that the acquisition will harm competition by giving Nvidia access to the competitively sensitive information of Arm’s licensees, some of whom are Nvidia’s rivals,” the regulator added.
Despite the lawsuit, Nvidia remains committed to pursuing the merger. “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,” the company said in a statement.
The GPU maker also reiterated why it believes merging with Arm is good for the industry. “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,” the company said. “Nvidia is committed to preserving Arm’s open licensing model and ensuring that its IP is available to all interested licensees, current and future.”
The FTC plans on holding the administrative trial for the lawsuit starting on Aug. 9, 2022. So Nvidia still has plenty of time to build its case. However, we wouldn’t be surprised if other regulators decide to intervene. Both the UK and European Union are also scrutinizing the merger on antitrust grounds and could decide to block the deal in the coming months.