The FTC Sues Nvidia to Block Its Historic Deal With Arm

from Wired (via Ars Technica)

The Federal Trade Commission has sued to block Nvidia’s acquisition of Arm, the semiconductor design firm, saying that the blockbuster deal would unfairly stifle competition.

“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,” Holly Vedova, director of the FTC’s competition bureau, said in a statement. “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.”

More here.

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2 Comments

  1. Reacting to this article, the statement by the FTC of their explanation on why they are suing Nvidia. The statement said, “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” (Wired). They tried iterating the magnitude of this deal between Nvidia and Arms away from monetary value and consequences. Yes, this would hurt the competing companies in receiving money and incentives. However, this would also hurt the development of the world and the quality of the internet.

    Nvidia acquired Arm for 40 billion dollars at the time in 2020 but soared to 75 billion dollars today. The rise in value must be considered in the FTC’s decision. The FTC said that this deal would stifle the innovation pipeline for years to come, and this is in the technology business. In class we talked about how technology and the internet were the way of the future for business and law. This deal would stop the current rise of the technology business in innovation, specifically in the PC world. ARM chips were just about to take over for Intel and AMD. Chips like ARM have been innovating the PC world, with Apple M1 chips made x86 designs. Those designs could also innovate architecture.

    This directly relates to my experience standing up for the International Shoe case. We talked about how the surrounding world’s condition can play a factor in the case. The ‘independent contractors’ were getting paid 500 thousand dollars a year in today’s world during the Great Depression. That’s what sealed International Shoe’s coffin. We also talked about the importance of a case after it’s been decided. If International Shoe had won the case and didn’t have to pay unemployment, every business would change their layout and plan accordingly.

  2. This article talks about how the Federal Trade Commissions sued to stop Nvidia, a major computer computer ship producer, from acquiring Arm (another chip producer). It was speculated that this acquisition would negatively impact innovation and possibly result in a monopoly. FTC was not the only Government regulator to scrutinize the deal, which makes me doubt the company’s promises to “[preserve] the pen licensing model and [ensure] that the IP is available to interested licensees.” I can’t think of a truly ethical and selfless business that would sacrifice making profits, so I am in support of stopping this merge—a business’s primary purpose is to make money after all.

    One of the main reason that this acquisition is being followed so closely is because Arm was willing to sell their intellectual property to “nearly anyone willing to pay the licensing fee,” and were thus seen as somewhat of a “Switzerland of the semiconductor agency.” Also, because of their wide usage and low cost they have become increasingly dominant in the semiconductor business. They are used in PCs, cars (like the Tesla), and even the Nintendo Switch! The importance and scope of Arm chips is another point towards liquidating this deal.

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