Nvidia has confirmed that the US Federal Trade Commission is scrutinizing the company’s proposal to merge with the UK chip design provider Arm.
“Regulators at the US 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.
The news means Nvidia’s proposal to acquire Arm is now facing regulatory scrutiny across three continents, including Asia, where China is also examining the deal. Regulators in both the UK and European Union are particularly worried the merger risks hurting competition and stifling innovation, which could lead to price increases for chips.
In the US, the FTC’s scrutiny of the deal has likely been occurring for several months. In February, Bloomberg reported that the regulator had opened an in-depth probe in Nvidia’s $40 billion proposal to acquire Arm. 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 killed.
Nvidia didn’t elaborate on the FTC’s concerns. However, Arm’s chip designs are used in smartphone, tablets, and laptops. If Nvidia were to merge with Arm, then the company could influence and undermine companies across the industry, including competitors, European regulators have warned.
In response, Nvidia has said it’s committed to maintaining Arm’s open-licensing model for its chip designs. The company also argues the merger is good for the electronics industry because Nvidia will pour resources into helping Arm develop new computing technologies.
“Despite these concerns and those raised by some ARM licensees, we continue to believe in the merits and the benefits of the acquisition to all,” Kress said in an earnings call on Wednesday. But to sway regulators, Nvidia will likely need to make some significant concessions on how it merges with Arm.
