San Francisco: The Federal Trade Commission (FTC) is suing to block Nvidia’s $40 billion acquisition of Arm from Softbank on antitrust grounds, media report says.
According to CNBC, the deal has faced scrutiny from regulators since it was announced last year. The US action is the biggest hurdle it has faced yet and threatens whether the deal will be completed.
“The proposed vertical deal would give one of the largest chip companies control over the computing technology and designs that rival firms rely on to develop their own competing chips,” the FTC said in an announcement.
Nvidia stock was up over 2 per cent on Thursday before the announcement and did not move significantly on the news. The FTC complaint is not yet public, the report said.
Arm is a core supplier of architecture technology to most semiconductor companies. Its Arm instruction set is at the core of nearly all mobile processors powering smartphones, including those made by Apple and Android devices that use Qualcomm chips.
But the company’s role in the chip industry was historical as a neutral supplier, raising concerns that Nvidia could cut off competitors from essential Arm technology.
Some of Nvidia’s processors also use Arm-designed cores and its Arm architecture, although the company is best known for graphics processors, which use different architecture.
“The complaint alleges that 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,” the FTC said in its statement.
FTC Chair Lina Khan, who was appointed by President Joe Biden to lead the agency shortly after her confirmation to the agency earlier this year, has signalled an interest in more robust antitrust enforcement.