Nvidia’s bid to purchase chip designer ARM has been at the center of controversy for over a year, and now the FTC has formally filed a lawsuit. Here’s why.
The U.S. Federal Trade Commission (FTC) is suing Nvidia. Why? Well, Nvidia attempted to acquire U.K. chip designer ARM in 2020 to the tune of $40 billion. And since then, it has encountered an onslaught of probes from governing agencies around the world. Now, the U.S. is stepping in, and the FTC clearly isn’t content to do it quietly. Nvidia has been under a microscope by regulating authorities around the world for more than a year. In what could be the largest semiconductor merger in history, everyone from industry professionals to antitrust regulators have voiced concern. Here’s why, and if Nvidia will ever be able to buy ARM. The main concern with Nvidia buying ARM is vertical integration — that is to say, two companies at separate steps in the supply chain. Nvidia produces chips, and ARM designs chip intellectual property (IP) and instruction set architectures (ISA). In short, Nvidia and ARM stand at different points in the life cycle of designing products that use semiconductors and bringing them to market. A U.K. probe into the deal from July spells out the concern: “Nvidia and ARM are important drivers of technological change in their fields, and the merger would afford the merged business a significant degree of control over key technologies for a range of sectors.” The report concluded that the deal isn’t appropriate given the implications it has for competition. ARM is, by far, the largest chip designer in the world. The company says its designs are used in 200 billion devices. In 2020, it was estimated that Qualcomm, Apple, and MediaTek made up three-fourths of the mobile computing chip market — and all three companies use ARM designs for their chips. That’s not to mention other types of products in which ARM designs are used. The company designs chips for data centers, GPUs for phones, and edge computing chips (like the ones you find in smart home devices). Nvidia is one of ARM’s customers, in fact. The company may focus its GPUs toward the consumer crowd, but it has rapidly moved into the world of autonomous vehicles, A.I. supercomputing, and data center security. Its most recent earnings report showed record revenue for its data center business, and for the first time, faster growth than its gaming business.
