OPINION: An FTC lawsuit puts the nail in the coffin, tpoletti writes, and Nvidia will be better off moving on.
The Federal Trade Commission drove a nail into the coffin of Nvidia Corp.’s proposed $40 billion acquisition of Arm Holdings Plc., but Nvidia’s headstrong chief executive is unlikely to accept its fate.
Indeed, Nvidia shares were up about 2% when the FTC announced its suit late in the trading session, and shares closed with a 2.2% gain. While analysts were optimistic about the potential of the deal to bring a major competitive force to the data center — where Intel Corp.’s INTC, +1.85% dominant position has only recently been challenged by Advanced Micro Devices Inc. AMD, +1.05% — they have predicted regulatory pushback since the deal was struck in September 2020.
Software developers, chip designers and server makers are nervous that Nvidia would have access to their product plans and roadmaps if they continued to license designs from ARM. The FTC’s complaint is not yet publicly available, but a spokeswoman said the agency alleges that “the combined firm would have the means and incentive to stifle innovative next-generation technologies, including those used to run data centers and driver-assistance systems in cars.
But analysts are not that concerned about the deal falling through, as they expect that Nvidia can accomplish just as much by continuing to work with Arm as a customer as it could if it owned the firm, only with smaller rewards. Nvidia wants to own the company so that it can invest in creating a software ecosystem to encourage developers to write for ARM-based products in the data center.
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