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U.S. FTC sues to block Nvidia deal to buy Arm

IbizaPocholo

NeoGAFs Kent Brockman

The U.S. Federal Trade Commission on Thursday sued to block U.S. chip company Nvidia Corp’s more than $80 billion planned acquisition of British chip technology provider Arm, adding to already significant global regulatory challenges of the deal.

The FTC said the proposed deal would give one of the largest chip companies control over computing technology and designs that competitors rely on to develop their own competing chips.

The deal has been widely expected to fall apart after facing opposition in the chip industry. British regulators said last month they would launch an in-depth probe of the deal, and it is also under scrutiny in the European Union.

Arm licenses its chip architecture and blueprints to major chipmakers Apple Inc, Qualcomm Inc and Samsung Electronics Co Ltd, underpinning the global smartphone ecosystem. Arm was sold to Japan’s SoftBank in 2016.

Nvidia said it would “work to demonstrate that this transaction will benefit the industry and promote competition.”

Arm declined to comment.

The stock-heavy deal has more than doubled in value since it was announced in September 2020 as Nvidia shares have risen on the performance of its data center business. Nvidia will owe only a $1.25 billion breakup fee if the deal does not close, and its shares closed up 2.2% at $321.26 on Thursday.

“Nobody thinks the deal is going to close,” said Stacy Rasgon, an analyst with Bernstein. “The data center story has been really playing out. The software narrative has become a bigger piece of the story. I would love to see this deal, but I don’t think they need it.”

Before Nvidia’s offer, Softbank had planned to file for an initial public offering for Arm. While Arm’s revenue is growing briskly, rising 56.3% to $1.46 billion in the six months ended Sept. 30, it is unclear whether Arm, in an IPO, would fetch anything close to the $80 billion in value offered by Nvidia.

That would be a new blow for the Japanese conglomerate whose Vision Fund assets sank by $10 billion last month, driven by plummeting valuations for investments in Chinese e-commerce firm Alibaba and ride-hailing service Didi Global Inc.

The FTC, which is made up of two Republicans and two Democrats, voted 4-0 to approve the challenge to the planned merger.

‘HIGHER PRICES AND LESS CHOICE’

The FTC alleged “the proposed merger would give 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, harming the millions of Americans who benefit from Arm-based products.”

The FTC added the combined firm “would have the means and incentive to stifle innovative next-generation technologies, including those used to run datacenters and driver-assistance systems in cars.”

Some semiconductor firms such as MediaTek Inc and Broadcom Inc have voiced support for the deal. But other firms such as Qualcomm have opposed it over concerns that Nvidia would have a first look at key technologies that they depend on and could then have better insights into their future products.

Qualcomm did not immediately respond to a request for comment.

Nvidia’s chief executive, Jensen Huang, made a biting comment at an industry dinner last month, saying that Qualcomm Chief Executive Cristiano Amon, who recently took the helm of an industry trade group, had proven to be a master advocate in the battle over Arm. Qualcomm had its own extensive battles with global regulators, including the FTC, which Qualcomm prevailed over after the regulator brought an antitrust lawsuit against it.

“He’s the perfect person to advocate for our industry,” Huang said from a stage as Amon sat in the audience. “I was trying to figure out, how is it possible that Cristiano knew every single regulator on the planet, and by the time I got there to tell them about my story on Arm, he was already there advocating against it?” Huang said, to stunned laughter from the crowd.

The FTC said it has cooperated closely with staff of the competition agencies in the European Union, United Kingdom, Japan, and South Korea.
 

Bryank75

Banned
nice GIF
 
Nvidia as well as all the others need to be investing those billions into Production capability. And they should have been doing it years ago.
If there was any hint anywhere of a new competitor it hasn't been shown for DECADES. Not even China has been able to create their own chips.
Current Producers have been milking the entire world with supply constraints. It's OIL OPEC and Diamond Mines all over again.
These chip producers are in need of being broken up into smaller Baby Bells if need be.
 
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Fare thee well

Neophyte
Nvidia as well as all the others need to be investing those billions into Production capability. And they should have been doing it years ago.
If there was any hint anywhere of a new competitor it hasn't been shown for DECADES. Not even China has been able to create their own chips.
Current Producers have been milking the entire world with supply constraints. It's OIL OPEC and Diamond Mines all over again.
These chip producers are in need of being broken up into smaller Baby Bells if need be.
100% better said than I could. This is definitely an example on why monopolies should never have a role in capitalism. This chip nonsense is becoming a nightmare.
 

AndrewRyan

Member
Nvidia's has demonstrated their willingness to use technology as gatekeepers against their competition. CUDA being one of the worst. They've shown questionable business practices trying to prevent vendors from offering AMD products if they wanted Nvidia's competitive wholesale prices. They charge extra licensing fees based on if their GPU is used in a datacenter. I'm glad the FTC stepped in since ARM is too important to trust to a company with their history.
 

Drew1440

Member
I oppose heavily government intervention in private business matters excluding land issues. If Nvidia starts blocking customers access to arm ISA, or raise licensing costs significantly, other corporations would be forced to create a new ISA which would actually increase competition unlike this FTC block.
We could see the return of PowerPc or MIPS processors, although mostly likely they would adopt RISCV
 

KungFucius

King Snowflake
Nvidia as well as all the others need to be investing those billions into Production capability. And they should have been doing it years ago.
If there was any hint anywhere of a new competitor it hasn't been shown for DECADES. Not even China has been able to create their own chips.
Current Producers have been milking the entire world with supply constraints. It's OIL OPEC and Diamond Mines all over again.
These chip producers are in need of being broken up into smaller Baby Bells if need be.
Why would breaking Nvidia up do anything? They are designers not fabricators. We need more competent foundries. It's basically just TSMC and Samsung for high end fab. Intel is gearing up to provide some service but also using TSMC so I'll call that a wash for now.

It would be nice if someone bought Global Foundries and brought them up to speed. Nvidia + ARM + GloFo would basically = Intel after many years of investment into GloFo ( minus the licensing of CPU tech, of course)
 
regardless of who sues who. UK Gov and militarily contracts will just tell Nvidia to fuck off.

Or they will just move more business over to IBM. But even so they would still want a UK based and grown chip maker still in the UK so who knows. Its gonna be a very long and drawn out thing. Don't any movement for a while.
 

STARSBarry

Gold Member
I oppose heavily government intervention in private business matters excluding land issues. If Nvidia starts blocking customers access to arm ISA, or raise licensing costs significantly, other corporations would be forced to create a new ISA which would actually increase competition unlike this FTC block.


Nice try Huang, we're onto you.
 
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Azurro

Banned
I oppose heavily government intervention in private business matters excluding land issues. If Nvidia starts blocking customers access to arm ISA, or raise licensing costs significantly, other corporations would be forced to create a new ISA which would actually increase competition unlike this FTC block.

Sure thing, because developing an ISA is something easily done in a few months.

Nvidia said it would “work to demonstrate that this transaction will benefit the industry and promote competition.”

Now this is the height of comedy. NVidia, the company of closed standards, the company that is famous for screwing over business partners whenever they can, the one raising prices as high as possible for their graphics cards...will somehow not rip off business partners after it acquires ARM? Hilarious.
 
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iHaunter

Member
Nvidia as well as all the others need to be investing those billions into Production capability. And they should have been doing it years ago.
If there was any hint anywhere of a new competitor it hasn't been shown for DECADES. Not even China has been able to create their own chips.
Current Producers have been milking the entire world with supply constraints. It's OIL OPEC and Diamond Mines all over again.
These chip producers are in need of being broken up into smaller Baby Bells if need be.
The issue isn't the ability to make chips, it's that hundreds of ships have still not been able to have their shipments unloaded. Millions of chips sitting in storage.

Cargo ships are so full that ports are struggling to unload them — Quartz (qz.com)
 
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IntentionalPun

Ask me about my wife's perfect butthole
I oppose heavily government intervention in private business matters excluding land issues. If Nvidia starts blocking customers access to arm ISA, or raise licensing costs significantly, other corporations would be forced to create a new ISA which would actually increase competition unlike this FTC block.
This is like Walmart buying all of the ports in the world, and not letting anyone else ship through them. Sure, we can build more port cities! COMPETITION!

Every successful economy in the world has had this level or regulation; "free market!" economics is a bunch of bullshit.
 

Fredrik

Member
I like their graphics cards and their stock is paying for my gaming hobby but I’m not sure buying ARM will lead to anything positive for anyone. But as they say in the article few believe it will go through at this point. I’m sure it’ll make many lawyers rich before anything is definitive though.
 
The issue isn't the ability to make chips, it's that hundreds of ships have still not been able to have their shipments unloaded. Millions of chips sitting in storage.
Anyone read "One Piece"? Drum Island arc is about King Wapol who collects twenty of the best doctors for himself then hunts down and kills all the other doctors. Now anyone who is sick needs to prostrate themselves before Wapol and beg to be healed.
Nvidia is Wapol
ARM are the doctors
Ford, GM, Tesla, Me, You the world are the beggers who really want to be healed but are begging for their place in line.
Fabs are just the plants that need to be ground up and turned into medicine.
Marines are currently blockading that medicine and can't get to the island.
Luffy and the straw hats are the FTC who are going to fix the situation.
 
I oppose heavily government intervention in private business matters excluding land issues. If Nvidia starts blocking customers access to arm ISA, or raise licensing costs significantly, other corporations would be forced to create a new ISA which would actually increase competition unlike this FTC block.
Congratulations! This is the most ignorant thing I've read on the internet today.

There is practically zero chance of any new CPU ISA being accepted by the market. Any further fragmentation of CPU ISAs in the market is a future that nobody fucking wants.

ARM's RISC ISA and Intel/AMD's x86-64 CPU ISAs are the limits for what anyone wants to develop code on. They're ubiquitous and literal billions of lines of code across every conceivable software application that has been written supporting these two CPU ISAs.

Nobody wants to have to go back and re-write their entire productivity or enterprise software stack to support some new ISA. No-one.
 

Notabueno

Banned
I oppose heavily government intervention in private business matters excluding land issues. If Nvidia starts blocking customers access to arm ISA, or raise licensing costs significantly, other corporations would be forced to create a new ISA which would actually increase competition unlike this FTC block.

Ahaha, ok dumb dumb.
 
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