US challenges Nvidia takeover of chip designer Arm

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Link: US challenges Nvidia takeover of chip designer Arm - BBC News

 

The US Federal Trade Commission has challenged the proposed takeover of chip designer Arm by Nvidia.

 

The FTC said the proposed acquisition would give Nvidia too much control over computing technology that competitors rely on.

 

Arm licenses its designs and technology to big tech companies, including Apple, Qualcomm, Sony and Samsung.

 

Nvidia said it would "work to demonstrate that this transaction will benefit the industry".

 

The company produces high-performance graphics cards for gaming, chips for mobile computing and also develops software and artificial-intelligence systems.

 

Originally a British firm, Arm was sold to Japan's SoftBank in 2016.

 

Nvidia announced its planned takeover in September 2020, but the deal has faced scrutiny and legal challenges from regulators, including inquiries in the UK and Europe.

 

The US watchdog 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."

 

Nvidia had promised to maintain Arm's open-licensing model, retain the brand, keep the company based in the UK and hire more staff.

[Koldov]

Just did a search for "Arm was sold to Japan's SoftBank in 2016 for..."

 

 

$32 BILLION!

 

 

 

I can't believe they think any tech firm would do this sort of thing though...

 

The US watchdog 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."

 

And this would be nice... if you believe it...

 

Nvidia had promised to maintain Arm's open-licensing model, retain the brand, keep the company based in the UK and hire more staff.

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...And this would be nice... if you believe it...

 

Nvidia had promised to maintain Arm's open-licensing model, retain the brand, keep the company based in the UK and hire more staff.

I have had close up experience of a take-over like this. In the 90s I was working for a wholly UK owned, but multi country centred, animal pharmaceutical firm. When the take-over deal was done, the incoming firm promised that they would not asset strip, and would maintain the 'feel' of the old company.

 

Within a few months of the takeover, the "mansion" (the building of the old head office) had been emptied of historical artefacts and exhibits collected over the years, many of the product lines were discontinued or sold off, our historical lab books were sent over to America to be archived in their data vaults, and many overseas locations were closed down along with the majority of the home (UK) operations closed too.

 

So, I wouldn't be surprised if Nvidia make promises to seal the deal, but don't abide by those promises.

[Koldov]

Yeah I think a lot of people know how this goes and have experience of it, even if not on this sort of scale...

 

Our logistics contract was taken over by a few different firms in the years I worked there, it was crazy to see the 'terms and conditions' change with each successive company.

 

Originally working conditions were very good, at the end I couldn't wait to get out.

 

And then there's MAT takeovers...

 

 

 

[Norphy]

The FTC aren't the only ones who are looking closely at this takeover. The NCSC is also raising concerns:

 

https://arstechnica.com/tech-policy/2021/11/uk-announces-national-security-probe-of-nvidias-54-billion-arm-deal/

 

I think a large part of the issue is, Softbank want rid of it to cover the costs of other investments that went sideways. I doubt they care too much who it goes to, and from a competition point of view, Nvidia are probably the worst company who could buy it.

Edited December 3, 2021 by Norphy

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Link: SoftBank's sale of Arm to Nvidia collapses, Arm to IPO - source | Reuters

 

Feb 7 (Reuters) - SoftBank Group Corp's (9984.T) sale of Arm Ltd to U.S. chipmaker Nvidia Corp (NVDA.O) has collapsed, a source familiar with the matter told Reuters on Monday, adding that Arm would plan for an IPO instead of the sale, which would have been worth as much as $80 billion.

 

The deal, announced in 2020, has faced several regulatory hurdles. The U.S. Federal Trade Commission sued to block it in December, arguing that competition in the nascent markets for chips in self-driving cars and a new category of networking chips could be hurt if Nvidia carried out the purchase.

 

The buyout is also under the scrutiny of British and EU regulators amid concerns that it could push up prices and reduce choice and innovation.

 

It also had yet to receive approval from anti-monopoly regulators in China, which have withheld approval of cross-border chip acquisitions that other countries have green-lit.

 

The deal's collapse could also affect a legal dispute between Arm's China joint venture and Allen Wu, the joint venture's original CEO.

 

Nvidia has become the most valuable U.S. chip company on the strength of its graphic processor chips. Although still seen as crucial for gaming, graphic processors have become much more widely used for artificial intelligence and other advanced fields.

 

The sale would have marked an early exit from Arm for Softbank, which acquired it for $32 billion. Chief Executive Masayoshi Son has lauded the potential of Arm, but is slashing his stakes in major assets to raise cash.

 

An Arm acquisition would have put Nvidia into even more intense competition with rivals in the data center chip market such as Intel and Advanced Micro Devices Inc.

 

Arm licenses its architecture and technology to customers such as Qualcomm Inc, Apple and Samsung Electronics Co Ltd that design chips for devices from mobile phones to computers.

 

Nvidia and SoftBank declined to comment. Arm did not immediately respond to a Reuters request for comment. Arm China declined to comment.

 

The value of the deal, which depended on Nvidia's stock price, was originally pegged at about $40 billion and rose with Nvidia's stock price to as $80 billion late last year, though the California company's stock has fallen since.

 

A Nvidia spokesperson in January, as questions over the future of the deal increased, said the company believed the acquisition "provides an opportunity to accelerate Arm and boost competition and innovation."

 

The Financial Times was the first to report that Softbank's Arm-Nvidia deal had collapsed.

 

The Japanese investment giant would receive a break-up fee of up to $1.25 billion, FT quoted one of the people as saying.