December 9, 2022

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Nvidia reveals FTC has expressed concerns over $40 billion Arm deal

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American semiconductor company Nvidia revealed on Wednesday that the U.S. Federal Trade Commission (FTC) has expressed concerns over the company’s $40 billion deal to acquire Arm that was announced in September last year, after the UK and European watchdogs did so as well.

The FTC’s revisal of the deal has been occurring for several months. Bloomberg reported in February, that the regulator had opened an in-depth probe in Nvidia’s $40 billion proposal to acquire Arm.

In addition, the same report noted that Google’s parent company Alphabet, Microsoft, and Qualcomm had been urging the FTC to intervene, with at least one of the firms wanting the deal removed.

CEO and co-founder Jensen Huang, said Nvidia managed to secure chip supplies from its contract manufacturer during the quarter, but that the global supply chain situation has been a “wake-up call.”

“We have a secured guaranteed supply, very large amounts of it, quite a spectacular amount of it, from the world’s leading foundry, and substrate and packaging and testing companies that are an integral usual part of our supply chain,” Huang said.

This news means Nvidia’s proposal to acquire Arm is facing regulatory scrutiny across three continents, including Asia, where China is also examining the deal. Regulators in both the UK and European Union are worried the merger will harm competition and restrict innovation, which could lead to price increases for chips.

“Regulators at the U.S. Federal Trade Commission (FTC) have expressed concerns regarding the transaction, and we are engaged in discussions with the FTC regarding remedies to address those concerns,” Nvidia CFO Colette Kress wrote in an earnings report on Wednesday.

In parallel, Nvidia has said it’s committed to maintaining Arm’s open-licensing model for its chip designs, while arguing the merger is good for the electronics industry because Nvidia will pour resources into helping Arm develop new computing technologies.

Outside of the regulatory concerns around Nvidia’s deal, the company revealed third-quarter revenues rose 9 percent to hit $7.1 billion, while net income jumped 84 percent to $2.46 billion.

By: Sheila Satori Mensa

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