US government sues to block Nvidia ARM acquisition

[da na]

Summary

In an unexpected turn of events, the United States government has sued Nvidia to block their acquisition of ARM Ltd. from Softbank. The FTC specifically instigated the lawsuit " to block the largest semiconductor chip merger in history to prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies" and that “This proposed deal would distort Arm’s incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals”. 

The EU and UK also had similar, previously discussed issues with this acquisition. 

 

Quotes

Quote

Nvidia said it will “continue to work to demonstrate that this transaction will benefit the industry and promote competition.” It said it will “vigorously contest” the FTC's lawsuit.

The company added that it is “committed to preserving Arm’s open licensing model and ensuring that its IP is available to all interested licensees, current and future.”

An Arm spokesperson referred questions to Nvidia. A Softbank spokesperson did not immediately reply to a request for comment.

The FTC said its four commissioners voted unanimously to file the complaint and a trial is scheduled to begin in August 2022.

 

My thoughts

Well, quite interesting. I'm not 100% sure why so many regulators are having issues with the deal. Benefits and drawbacks have already been discussed so I won't talk too much about that but it would likely be very beneficial for both companies. 

 

Sources

US government sues to block $40 billion Nvidia-Arm chip deal (msn.com)

[Techstorm970]

17 minutes ago, Mel0nMan said:

Quote

Nvidia said it will “continue to work to demonstrate that this transaction will benefit the industry and promote competition.”

 

17 minutes ago, Mel0nMan said:

My thoughts

 

Well, quite interesting. I'm not 100% sure why so many regulators are having issues with the deal. Benefits and drawbacks have already been discussed so I won't talk too much about that but it would likely be very beneficial for both companies.

ARM technology is the present heart of handheld computing and is quite possibly the future of computing, in general.  Many different companies (including NVIDIA) were using ARM to make chips; buying ARM itself could easily give NVIDIA an unfair and irreversible advantage in the industry for the foreseeable future.  (Pricing could become extremely skewed in NVIDIA's favor down the road.)  And especially within the handheld device space, there is no realistic alternative for ARM technology.

 

TL;DR  The deal would be very good for both NVIDIA and ARM, but it would be terrible for everyone else.  That's why so many governments have issues with it.

[The_russian]

20 minutes ago, Mel0nMan said:

In an unexpected turn of events, the United States government has sued Nvidia to block their acquisition of ARM Ltd. from Softbank.

I haven’t been watching this whole story too closely so maybe I’m wrong, but wasn’t this completely expected? I thought I remember basically every article I read about the rumored acquisition saying to expect the governments, both US and UK, to appose the deal. 

[poochyena]

38 minutes ago, Mel0nMan said:

I'm not 100% sure why so many regulators are having issues with the deal.

Its mentioned in your post. " to block the largest semiconductor chip merger in history to prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies". Nvidia by no means is in a vulnerable position and needing to merge with other companies to be able to compete. They are able to compete plenty well as is.

[Kisai]

1 hour ago, Mel0nMan said:

Summary

In an unexpected turn of events, the United States government has sued Nvidia to block their acquisition of ARM Ltd. from Softbank. The FTC specifically instigated the lawsuit " to block the largest semiconductor chip merger in history to prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies" and that “This proposed deal would distort Arm’s incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals”. 

The EU and UK also had similar, previously discussed issues with this acquisition. 

 

Quotes

 

My thoughts

Well, quite interesting. I'm not 100% sure why so many regulators are having issues with the deal. Benefits and drawbacks have already been discussed so I won't talk too much about that but it would likely be very beneficial for both companies. 

 

Sources

US government sues to block $40 billion Nvidia-Arm chip deal (msn.com)

The US is kinda late to the table here, but the chip-shortage and logistics problem probably demonstrated exactly why this merger was a bad idea. 

 

In a nutshell

a) Nvidia might change or refuse/revoke licenses to competitors like AMD, Intel, Qualcomm, Marvell, Samsung and Apple. 

Keeping in mind that

- AMD produces ARM parts

- Intel produces ARM SoC's in their FPGA's

- Qualcomm, and Samsung produce ARM SoC's

- Marvell, Qualcomm produce SoC's in embedded devices.

Plus there are hundreds of licenses ranging from Nintendo to Ford and GM that likely use these SoC's in the infotainment systems.

b) nVidia has a history of making proprietary features (CUDA *cough*) and not cross-licensing or open-sourcing them to make them available on competitors products

c) nVidia has shown to be hostile to Apple, and that has resulted in long-term consequences. One of them being the development of their own (Apple A-series) chips.

 

So previous bad-faith actions by nVidia ultimately shows why they should not own or even have any control over ARM. It would be like if Apple bought AMD, and then only put their chips in Mac Pro's. The evidence is there that they would do this to screw their competitors, because Apple has bought companies and then made the technology iOS/Mac only. Apple likewise should not buy ARM.

 

No company that produces ARM chips, should own ARM. So that includes the 6 companies I named above, but also "holding company"'s that produce nothing. There is too much risk that one company will buy out ARM or the majority of ARM and then subsequently shotgun the other partners into selling their shares and taking it for themselves.

 

Ultimately the best owner for ARM would probably be a consortium of western-backed governments, to ensure that the ARM designs don't end up in counterfeit Chinese hardware, or countries that western countries are forbidden to export to (such as Iran and North Korea.) There's not that many companies that are that important to the world that could justify this, and it's one of those things that you'd normally have pension funds owning.

 

[da na]

3 minutes ago, Kisai said:

bad-faith actions by nVidia

GeForce FX series

/s

[Arika]

Sorry....But why don't they just block it, why do they need to sue NVidia to get money out of them? They are government department for christ sake just do it.

[XenosTech]

13 minutes ago, Arika S said:

Sorry....But why don't they just block it, why do they need to sue NVidia to get money out of them? They are government department for christ sake just do it.

That would be the logical and sensible thing to do but then again capitalism doesn't benefit from the sensible thing

[da na]

11 minutes ago, Arika S said:

Sorry....But why don't they just block it, why do they need to sue NVidia to get money out of them? They are government department for christ sake just do it.

Like trying to get all of the water out of the Titanic with a Home Depot bucket. 

Pointless and ineffectual. 

[Kisai]

14 minutes ago, Arika S said:

Sorry....But why don't they just block it, why do they need to sue NVidia to get money out of them? They are government department for christ sake just do it.

Probably to make it stick, or set a precedent when inevitably Microsoft or Apple try to buy ARM.

[leadeater]

1 hour ago, Arika S said:

Sorry....But why don't they just block it, why do they need to sue NVidia to get money out of them? They are government department for christ sake just do it.

Suing doesn't have to be for money, this wouldn't be.

[poochyena]

1 hour ago, Arika S said:

Sorry....But why don't they just block it, why do they need to sue NVidia to get money out of them? They are government department for christ sake just do it.

Thats just how the process works. Its like asking why the government doesn't just send people to jail and instead put them in court first

[hishnash]

1 hour ago, Kisai said:

Probably to make it stick, or set a precedent when inevitably Microsoft or Apple try to buy ARM.

Apple would not want to buy ARM as it would likely request in them being forced to license thier own ARM based chip designs, if apple were to buy arm they would likely create a foundation and fund that foundation to buy it (possibly like the LLVM Foundation or the Swift Foundation) this would likely result in arm dropping its licensing fees altogether (apple is not at all interested in licensing out IP to third parties they either open source it or they keep it in house and never share it they never license it). 

 

[hishnash]

2 hours ago, Kisai said:

a) Nvidia might change or refuse/revoke licenses to competitors like AMD, Intel, Qualcomm, Marvell, Samsung and Apple. 

 

Some licenses they can't change or revoke. Those with perpetual ISA licenses can't be revoked (such as apple).  They could review to license new updates of the ISA to apple and apple would just fork and make thier own changes that would fragment the industry and massively de-value the ARM ownership as apple is the main contributor to the most important compile for the platform if apples engines stop caring about the future of nvidias versions of ARM then LLVM will not have very good optimisation for that target.

But Nvidia could be really nasty (and I expect they will) to smaller players in particular those that license the entire cortex designs. Pushing up the fees, putting other restrictions on them or requiring that they include other Nvidia IP/and or not license from nvidia's competitors. 
 

 

2 hours ago, Kisai said:

Ultimately the best owner for ARM would probably be a consortium of western-backed governments, to ensure that the ARM designs don't end up in counterfeit Chinese hardware, or countries that western countries are forbidden to export to (such as Iran and North Korea.) There's not that many companies that are that important to the world that could justify this, and it's one of those things that you'd normally have pension funds owning.

 

I think the best would be for the instruction set to be considered open source and the cortex IP to be sold out to current license holders so that they can continue to develop it and also let them sub-license it. I would not trust a government owned consortium to not end up using it in ways that are just as bad as nvidia (eg requiring you to use other tec from these nations if you want to use ARM etc). 

 

[Kisai]

12 minutes ago, hishnash said:

 

I think the best would be for the instruction set to be considered open source and the cortex IP to be sold out to current license holders so that they can continue to develop it and also let them sub-license it. I would not trust a government owned consortium to not end up using it in ways that are just as bad as nvidia (eg requiring you to use other tec from these nations if you want to use ARM etc). 

 

 

Yes but if you open it, that ceases development of it. Most open-source software has that problem, where it feature creeps without someone "owning" the software and trademarks to ensure that only X product is X.

 

Like hardware is arguably worse in this regard where ARM SoC's are not compatible with each other, only cpu cores, and only backwards compatible with the previous version, not all of them. 

[hishnash]

1 hour ago, Kisai said:

Yes but if you open it, that ceases development of it. Most open-source software has that problem, where it feature creeps without someone "owning" the software and trademarks to ensure that only X product is X

I would expect a foundation to be established LLVM c# swift python all of these Important open source projects end up with a foundation funded by large industry vendors. 
 

 

Given how successful LLVM has become with even intel giving up on making thier own compiler. The open source foundation approach is a well known model for the large tec industry players 

[Spindel]

I don't know what to think, while the risks with and Nvidia ownership are clear to me an Apple, AMD, Intel, IBM etc ownership wouldn't be better either.

 

The problems lies in SoftBank, the current owner, being and investment management company and from their point of view long term ownership is not interesting for stuff like ARM. They invest, rise the value, and sell companies or invest, cut the company into pieces and sell of valuable assets at a profit.

 

Open sourceing ARM is a pipe dream. Will not solve any of the problems and probably only make it worse. 

 

Best case would be if there was a investor not tied to the tech giants that could put up with the money to make ARM an company of their own (lets say a fifty rich individual that is not Jeff Bezos). 

 

Other alternative would be to have ARM owned by conglomerate like more like AIM alliance of the 90's. But this time maybe more the best bet would be GAFAM or something similar if we throw in AMD and Nvidia. 

[mr moose]

I simply don't have a problem with this.     I can see why the US would have a problem, they've forgotten what a monopoly is much less how to regulate one.    The rest of the world will just hold NVIDIA to keep the playing field open and fair or they'll be forced to sell the IP. 

[Lightwreather]

10 hours ago, Mel0nMan said:

In an unexpected turn of events

Was it really THAT unexpected? I'm honestly curious.

[Video Beagle]

9 hours ago, Kisai said:

or Apple try to buy ARM.

ARM went to Apple first and Apple said "No thanks!" precisely because they didn't want this headache.

[Albal_156]

The one crucial point to this is this...

 

Nvidia already owns ARM IP. Why do they need to own ARM to make their own CPUs using ARM IP. Only reason they would want to own ARM is to change how they do things take jobs away from where they are currently located and gain a monopoly in the ARM CPU market which is massive due to the number of handhelds and microcontrollers which use ARM IP.

 

Knowing how Nvidia does things I would not be surprised if they make things proprietary and shut things down so other companies cannot make the same level of product. Other companies also don't trust Nvidia due to their practices over the history of the tech and computing space and I wouldn't either. Then there is the number of companies notably Apple Qualcomm and Samsung who were against this plus the UK Government too. Kinda glad its looking increasingly unlikely it will go ahead.

[Video Beagle]

IIRC from when all this first started, all the big players except for NVIDIA stayed out of this because of this problem...BUT the fact is Softbank doesn't want it anymore.

 

So you have a company that wants to unload the tech.

A bunch of company's that don't want to buy it for whatever reasons, and 1 company that kind of begrudgingly stepped up to buy it, despite knowing the legal headaches it was going to cause.

 

I don't know what the solution is, but just doing nothing isn't in the cards here.

[Taf the Ghost]

14 minutes ago, Video Beagle said:

IIRC from when all this first started, all the big players except for NVIDIA stayed out of this because of this problem...BUT the fact is Softbank doesn't want it anymore.

 

So you have a company that wants to unload the tech.

A bunch of company's that don't want to buy it for whatever reasons, and 1 company that kind of begrudgingly stepped up to buy it, despite knowing the legal headaches it was going to cause.

 

I don't know what the solution is, but just doing nothing isn't in the cards here.

You have a misread of the situation. Nvidia wants to buy ARM for 2 reasons: 1) Turns them into an Ecosystem Holder while also giving them every bit of information about what every competitor is doing. (There's a small ARM device in basically every SoC on the market now.) 2) Nvidia becomes a big, big player by digging Softbank out of a bad spot. This is why Nvidia is gungho on it and basically no one else is.

The "way out" was always an IPO. ARM just isn't worth what Softbank paid for it. It's a fully profitable company that's worth less than 10 billion USD. That's the "real" problem in all of this.

The government side of things is only the USA had any interest in this going through. It's bad for basically anyone else but the USA, mostly as a key UK asset falls under US control. However, what it really looks like it's Nvidia's Achilles Heel has come back at them: they can never get along with anyone. They even lost out with the US DoJ. (The UK and EU were always going to block it. It's why Nvidia bought a perpetual ARM license at the same time the deal was announced.)

[leadeater]

32 minutes ago, Video Beagle said:

I don't know what the solution is, but just doing nothing isn't in the cards here.

Industry Alliance with all the major players chipping in to but has independent board or a joint vote so none of them legally own it, or at least have a majority controlling share in it.

 

An IA with a binding charter that obligates members to fund it would be a much simpler legal position in terms of monopoly laws or trade restrictions.

[Fasterthannothing]

Well at least they are doing something before the sale instead of trying to force companies to give up rightfully bought products like Giphy and Facebook. But on the other hand who could actually buy ARM without having some monopolistic interference? I would actually argue that Nvidia is better than Amazon, Microsoft, Intel, or Apple trying to do so (which you can bet they will if Nvidia doesn't get to buy it). Nvidia doesn't make any mobile devices on a large scale at least I mean off the top of my head I can literally only think of 3 devices the shield, shield tablet, and shield TV neither of which have any sizable amount of market share. But for instance if say Amazon bought arm they sell a ton of smart devices and tablets that do have a sizable market share that would be a huge benefit for themselves.