FTC launches in-depth investigation into Nvidia’s acquisition of ARM

Nvidia’s $40 billion acquisition of Arm from SoftBank has led the US Federal Trade Commission to launch an investigation into the deal.

 

The EU and the UK have already launched a competition investigation into the deal on concerns floated by rival chip makers and users.

 

The FTC has asked rival companies and others to lodge their complaints and any concerns about the deal. Considering the acquisition will have wide ramifications over the technology world,  regulators do not want to be caught napping as China is seen as a potential threat by many people.

FTC Nvidia ARM Acquisition

 

The current terms of the deal, which is scheduled to close by March 2022, will see Nvidia pay Softbank $21.5 billion in stock and $12 billion in cash. In addition, if Arm meets certain financial targets, Nvidia agreed to pay Softbank up to $5 billion more. The sale is subject to regulatory approval from China, the EU, the UK and the US.

 

Qualcomm, the leading maker of mobile communications chips, has already voiced concerns over the deal. Other customers of Arm are also worried about the acquisition. Arm’s designs for low-powered chips are used in most smartphones. Phones produced by Apple, Huawei, Samsung, and Qualcomm all use Arm-based chips, which are simpler than traditional processing units but draw less power.

 

Nvidia said that ARM’s chip design will be utilized in its data centers, where the demands of artificial intelligence and cloud computing have led to a need for more energy-efficient processors. 

 

This has the potential for driving the competition high as some of the biggest tech companies buy large volumes of data center chips. Some, including Amazon, have also started to design their own Arm-based processors.

 

Companies have voiced concerns that once Nvidia takes over Arm, then all competing entities in the market, including cellphone, smart device makers, and any one who uses the chip tech of Arm, will be placed at a disadvantage and will be at the mercy of Nvidia’s largess.“The overarching worry is the loss of neutrality of Arm. At the moment, the company is very neutral in its packages with its customers. But the worry is that in the medium and long term, Nvidia will use Arm to disadvantage other companies and pump up its own technology,” said one concerned rival.

 

If it is allowed to buy Arm, Nvidia said it was “confident that both regulators and customers will see the benefits of our plan to continue Arm’s open licensing model and ensure a transparent, collaborative relationship with Arm’s licensees”.

 

“The overarching worry is the loss of neutrality of Arm. At the moment, the company is very neutral in its packages with its customers. But the worry is that in the medium and long term, Nvidia will use Arm to disadvantage other companies and pump up its own technology,” said one concerned rival.

 

With cybersecurity a growing concern, the regulators and the concerned governments are looking at whether the deal will have any national security implications. Oliver Dowden, UK’s digital, culture, media and sport secretary, has been pressured to intervene and look deeper into the deal. “This transaction is great for innovation and market competition. We’re confident that the regulators will see the benefits to the tech ecosystem.” 

 

Avatar
Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

Recent Posts

Blackstone puts in an offer of $1.68 billion for St Modwen

Blackstone puts in an offer of $1.68 billion for St Modwen

Blackstone, the private equity firm, is planning to acquire St Modwen Properties, a logistics and housing developer, for £1.2bn ($1.68 billion) in a bid to take advantage of the P
16 hours ago
Tesla to lose millions as Stellantis ends CO2 credit buying deal

Tesla to lose millions as Stellantis ends CO2 credit buying deal

Stellantis, the carmaker formed earlier this year by the merger of Fiat Chrysler and PSA, has revealed that it no longer needs to buy emission credits from Tesla, which will result
2 days ago
AB InBev CEO Brito to step down

AB InBev CEO Brito to step down

Anheuser-Busch InBev SA’s Chief Executive Officer Carlos Brito will step down from his role, effective July 1 and Michel Doukeris will succeed him as the new CEO. Brito, who beca
2 days ago
Australia’s Officeworks stops sales of Apple’s AirTags on child safety concerns

Australia’s Officeworks stops sales of Apple’s AirTags on child safety concerns

Officeworks, the Australian office supply store chain, has pulled Apple’s newly launched AirTags from its store following safety concerns for children from its button battery
2 days ago
Ex Google AI scientist joins Apple after resigning in protest for unfair practices

Ex Google AI scientist joins Apple after resigning in protest for unfair practices

Apple, Inc. has hired a former Google AI scientist who resigned in protest against the firing of two employees from the Ethics division. Sammy Bengio, the ex-Google employee, will
4 days ago
Solid Power raises $130 million in second funding round from Ford and BMW

Solid Power raises $130 million in second funding round from Ford and BMW

Solid Power, a solid-state battery system startup, has raised $130 million in Series B funding led by Ford Motor Company and BMW Group. The Louisville, Colorado-based SSB developer
4 days ago