Key Highlights:
- US Federal Trade Commission is not in favor of Nvidia Corp carrying out its US$80 billion purchase of Arm Ltd.
- As per FTC, the deal will affect the nascent market for chips in self-driving cars along with the new category of chips.
- Nvidia is confident about the deal, as it thinks that the deal will make Arm Corps a more viable alternative.
Collaboration for Future Competition
The US Federal Trade Commission (FTC) has recently argued that Nvidia’s purchase of Arm Ltd. will hurt the market competition for chips in self-driving cars. Nvidia is collaborating with Arm Ltd to promote competition and benefit the industry. The news regarding collaboration was announced on September 2020. However, the deal is still on a pause.
Nvidia corporation is an American multinational technology company that designs graphic processing units (GPU) for gaming along with System on chip units (SoCs) for mobile devices. Arm Ltd, on the other hand, is a British semiconductor and software design company that primarily designs ARM processors (CPUs) along with software development tools and system on chip units. According to Nvidia, Intel’s x86 architecture has 97.4% shares in the data center servers. With this collaboration, Nvidia is aiming to create Arm’s presence in the data center servers as well. Thus, its motive to acquire Arm Ltd is to present it as a strong contender against Intel Corp.
FTC’s Argument
On Monday, FTC has released its complaint with a concealed view. The Complaint read, “Nvidia purchase of Arm is not a good idea because about hundreds of chip companies are dependent on Arm Ltd. Furthermore, the deal would alter the Arm’s reputation, as the companies would be afraid of Nvidia being aware of their product plans.”
FTC is more concerned towards market. As per FTC, Arm Corp stands dominant in the market where x86 is not in use. Another reason behind FTC’s concern is Arm Corp designs system on chip units and can provide assistance in building self-driving car chips and “data processing unit” chips. Besides, the deal with Nvidia could create a hindrance in building future advancements.
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