The US Federal Trade Commission (FTC) says that the disintegration of the merger proposed between Nvidia and Arm “safeguards future innovation” in the tech industry.
On February 14, FTC Bureau of Competition Director Holly Vedova said the termination “of what would have been the largest semiconductor chip merger will preserve competition for key technologies and safeguard future innovation.”
“This result is particularly significant because it represents the first abandonment of a litigated vertical merger in many years,” Vedova commented.
Nvidia announced the purchase of Arm from SoftBank in 2020 for $12 billion in cash and $21.5 billion in stock, alongside $5 billion locked under an earn-out clause.
The potential merger of Nvidia and Arm, given their collective market share and expertise in tech, raised regulatory concerns worldwide. The European Commission (EC) launched an investigation, quickly followed suit by the UK’s Competition and Markets Authority (CMA) and the FTC.
On December 2, 2021, the FTC voted to file a complaint and attempt to stop the acquisition from going ahead. Specifically, the watchdog claimed the merger of Nvidia and Arm would hurt competition in processor markets, including SmartNICs, driver assistants, and cloud computing.
At the time, the FTC said:
“The proposed merger would give Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice.”
Facing such a push-back and delays caused by regulators, on February 8, Nvidia and SoftBank jointly announced the termination of the merger.
“I am grateful to the FTC team for their outstanding work on the investigation and litigation,” the FTC director added. “I also want to express my appreciation for the cooperation between FTC staff and competition agencies in the European Union, United Kingdom, Japan, and South Korea.”
Rene Haas has now been appointed as Arm’s new CEO. In a briefing, the executive said that while it was “disappointing” that the deal did not go through, Arm will be going public and an IPO date is set for within the fiscal year ending March 31, 2023.
According to Haas, the ‘version’ of Arm going public will be closer to what the tech giant was before its acquisition by SoftBank. The new CEO also said that with emerging business opportunities in areas including IoT and the metaverse, “the opportunity for Arm has never been brighter.”
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