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FTC sued to block Nvidia-Arm merger, which would be the biggest in chip industry: NPR

In this file photo, Nvidia CEO Jensen Huang gives a speech on AI and gaming.

Chiang Ying-ying / AP


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Chiang Ying-ying / AP


In this file photo, Nvidia CEO Jensen Huang gives a speech on AI and gaming.

Chiang Ying-ying / AP

On Thursday, the Federal Trade Commission sued to block a $40 billion deal in which Silicon Valley chipmaker Nvidia sought to buy British chip designer Arm.

Officials with the FTC say the deal, which will be the largest semiconductor chip merger in history, will give Nvidia too much power, harm competition and raise prices for consumers.

“The technologies of tomorrow depend on sustaining today’s competitive, advanced chip markets,” said Holly Vedova, head of the FTC’s competition office. “This proposed deal would distort Arm’s incentives in the chip market and allow the company to combine unfairly weaken Nvidia’s competitors.”

The lawsuit comes after months of scrutiny from regulators in both Washington and Europe.

An Nvidia spokesman said it will fight the FTC’s lawsuit and that the company “will continue to work to demonstrate that this transaction will benefit the industry and promote competition.”

This is the latest action taken by the FTC led by Lina Khan, harsh critic about how big tech companies use their power, who have vowed to tackle business mergers that hurt competition and can affect consumer prices.

Steven Weber, professor at the School of Information at the University of California, Berkeley, said: “Lina Khan has been very clear that she wants to reduce the company’s focus on economically important areas, and here are two. very large companies with converging markets. , in an email.

“On the surface, it’s a battle against the big getting bigger and bigger,” he said.

Weber said Nvidia has become a leading supplier of technology based on machine learning and artificial intelligence. Arm designs blueprints for the high-performance chips that power smartphones and other devices.

“Put those two together, and you can see potential Weber said.

When the agreement was announced, in September 2020, Nvidia CEO Jensen Huang said the acquisition would “create the leading computing company for the age of artificial intelligence.”

Huang also promised not to interfere with Arm’s business model. It is considered the “Switzerland” of the chip industry because it provides chip designs to any company looking for them, including the big Tech companies Apple and Amazon.

But questions from regulators quickly surfaced. Concern from tech giants including Alphabet, Qualcomm and Microsoft, that the merger would give Nvidia too much power over Arm. Tech companies are also worried that it will allow Nvidia to access sensitive information about its competitors, something the FTC echoed in its complaint.

“Arm licensees share their competitively sensitive information with Arm because Arm is a neutral partner, not a rival chipmaker,” the FTC wrote in the filing. main. “Acquisition could lead to a serious loss of confidence in Arm and its ecosystem.”

The lawsuit from regulators comes amid a global chip shortage that is ravaging supply chains, including those of major automakers like GM. It has forced to close some assembly lines until the end of March.

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