Is Nvidia’s bid for Arm at risk?

1 min read

Last week's news that the US Federal Trade Commission has challenged the proposed takeover of chip designer Arm by Nvidia is certainly a blow and follows on from regulator action both in Europe and the UK.

Arm’s business model sees it license designs and technology to big tech companies, including competitors to Nvidia such as Apple, Qualcomm, Sony and Samsung.

The US watchdog has said that the proposed merger would give Nvidia. "the ability and incentive to use its control of Arm's technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice."

In response, Nvidia said it would "work to demonstrate that this transaction will benefit the industry".

Nvidia announced its planned takeover of Arm in 2020, and while it has promised to maintain the company's open-licensing model and keep the company based in the UK, what has been described as, ‘the largest semiconductor chip merger in history’ may now be in trouble.

The FTC expressed concerns that the deal would result in a ‘chip conglomerate’ that could end up stifling the innovation pipeline for next generation technologies – well, that’s the view of Holly Vedova, bureau of competition director at the FTC.

She went on to say the deal would, “distort Arm’s incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals.”

The FTC is working closely with competition agencies in the European Union, UK, Japan and South Korea on this and last month, the UK government ordered an in-depth investigation into Nvidia’s takeover.

Yet, despite the mounting opposition to the deal Masayoshi Son, the chief executive of seller SoftBank, which acquired Arm back in 2016, still believes that the takeover will eventually be cleared.