""Tech News"" – Google News
The Federal Trade Commission sued Thursday to block the $ 40 billion purchase of chip designer Arm by graphics chip maker Nvidia, …
The Federal Trade Commission on Thursday sued the $ 40 billion purchase of chip designer Arm by graphics chip maker Nvidia.
Nvidia Corp. based in Santa Clara, California, announced in September 2020 that it had acquired UK-based Arm Ltd. from Japanese tech giant Softbank to “create the world’s leading computing company for the AI age”.
However, the deal immediately raised concerns that Arm would sell its chip design licensing business model to hundreds of tech companies, including many of Nvidia’s competitors.
Many of the smartphones in the world run on Arm’s chip design, and it’s a major supplier to companies like Apple and Samsung. It’s also an innovator in chip technology that can power artificial intelligence for connected devices like medical sensors. Nvidia’s chips are essential to computers and data centers, and the company says it has a wide range of competitors, from chip makers like AMD, Intel, and Qualcomm to computer network provider Cisco, to tech giants Google and Amazon.
“The FTC is suing the largest semiconductor chip merger in history to prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies,” said Holly Vedova, director of the FTC Bureau of Competition, in a press release. “This proposed deal would skew Arm’s incentives in the chip markets and allow the combined company to unfairly undermine Nvidia’s rivals.”
The deal would give the joint venture control over the technology competing firms need to develop their own chips, the FTC claimed. That would hurt competition in markets where Nvidia uses arm-based designs, the FTC says, including systems in cars that automate things like lane changes and prevent collisions, and data centers that are critical to cloud computing.
Regulators in the UK and the European Union have also started investigations into the transaction over competition concerns.
Nvidia said it will “continue to work to show that this transaction will benefit the industry and encourage competition.” It said it would “vigorously contest” the FTC lawsuit.
The company added that it “has a duty to maintain Arm’s open licensing model and to ensure that its intellectual property is available to all interested licensees, both now and in the future.”
An Arm spokesman referred questions to Nvidia. A Softbank spokesperson did not immediately respond to a request for comment.
The FTC said its four commissioners voted unanimously to file the complaint and a process is expected to begin in August 2022.
President Joe Biden has urged federal regulators to look more closely at mergers and anti-competitive behavior in US industry. He installed big tech critic Lina Khan as head of the FTC.
Copyright © 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, written, or redistributed.