Nvidia’s $40 billion acquisition of Arm from SoftBank has led the US Federal Trade Commission to launch an investigation into the deal.
The EU and the UK have already launched a competition investigation into the deal on concerns floated by rival chip makers and users.
The FTC has asked rival companies and others to lodge their complaints and any concerns about the deal. Considering the acquisition will have wide ramifications over the technology world, regulators do not want to be caught napping as China is seen as a potential threat by many people.
The current terms of the deal, which is scheduled to close by March 2022, will see Nvidia pay Softbank $21.5 billion in stock and $12 billion in cash. In addition, if Arm meets certain financial targets, Nvidia agreed to pay Softbank up to $5 billion more. The sale is subject to regulatory approval from China, the EU, the UK and the US.
Qualcomm, the leading maker of mobile communications chips, has already voiced concerns over the deal. Other customers of Arm are also worried about the acquisition. Arm’s designs for low-powered chips are used in most smartphones. Phones produced by Apple, Huawei, Samsung, and Qualcomm all use Arm-based chips, which are simpler than traditional processing units but draw less power.
Nvidia said that ARM’s chip design will be utilized in its data centers, where the demands of artificial intelligence and cloud computing have led to a need for more energy-efficient processors.
This has the potential for driving the competition high as some of the biggest tech companies buy large volumes of data center chips. Some, including Amazon, have also started to design their own Arm-based processors.
Companies have voiced concerns that once Nvidia takes over Arm, then all competing entities in the market, including cellphone, smart device makers, and any one who uses the chip tech of Arm, will be placed at a disadvantage and will be at the mercy of Nvidia’s largess.“The overarching worry is the loss of neutrality of Arm. At the moment, the company is very neutral in its packages with its customers. But the worry is that in the medium and long term, Nvidia will use Arm to disadvantage other companies and pump up its own technology,” said one concerned rival.
If it is allowed to buy Arm, Nvidia said it was “confident that both regulators and customers will see the benefits of our plan to continue Arm’s open licensing model and ensure a transparent, collaborative relationship with Arm’s licensees”.
“The overarching worry is the loss of neutrality of Arm. At the moment, the company is very neutral in its packages with its customers. But the worry is that in the medium and long term, Nvidia will use Arm to disadvantage other companies and pump up its own technology,” said one concerned rival.
With cybersecurity a growing concern, the regulators and the concerned governments are looking at whether the deal will have any national security implications. Oliver Dowden, UK’s digital, culture, media and sport secretary, has been pressured to intervene and look deeper into the deal. “This transaction is great for innovation and market competition. We’re confident that the regulators will see the benefits to the tech ecosystem.”
