The United States Federal Trade Commission said the deal would put Nvidia in control of the computing technology that competitors rely on.
The United States Federal Trade Commission (FTC) sued Thursday to block the US chip supplier Nvidia Corp’s proposed $ 75 billion acquisition of British chip design maker Arm.
The FTC said the proposed vertical deal would give one of the largest chip companies control over computer technology and designs that competitors rely on to develop their own competing chips.
Arm, the UK’s premier tech company, which was sold to Japanese SoftBank in 2016, is licensing its blueprints to major chipmakers such as Apple Inc, Qualcomm Inc and Samsung Electronics Co Ltd, which underpin the global smartphone ecosystem.
Nvidia said, “As we take this next step in the FTC process, we will continue to work to show that this transaction will benefit the industry and encourage competition.”
Arm declined to comment.
The deal was widely expected to fail after encountering resistance from the chip industry. UK regulators said last month they would open an in-depth investigation into the deal, and it is under scrutiny in the European Union as well. However, Nvidia stock remained largely unchanged through Thursday’s news as investors focused on the growing data center business.
The FTC claimed, “The proposed merger would give Nvidia the opportunity and the incentive to use its control over this technology to undermine its competitors, reduce competition and ultimately result in lower product quality, less innovation, higher prices and less choice to lead what harms millions of Americans who benefit from arm-based products. “
The FTC added that the combined company “would have the resources and the incentive to suppress innovative next-generation technologies, including those used to power data centers and driver assistance systems in cars.”
The US company agreed to buy ARM from SoftBank in September 2020, sparking backlash from politicians, competitors and customers.
According to the FTC, it has worked closely with employees of the competition authorities in Great Britain, the European Union, Japan and South Korea.
