[HN Gopher] FTC Sues to Block $40B Semiconductor Chip Merger
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FTC Sues to Block $40B Semiconductor Chip Merger
Author : badwolf
Score : 130 points
Date : 2021-12-02 20:30 UTC (2 hours ago)
(HTM) web link (www.ftc.gov)
(TXT) w3m dump (www.ftc.gov)
| [deleted]
| mullingitover wrote:
| So what I'm reading is Intel ordered the FTC to dismantle any
| potential competition.
| voz_ wrote:
| This is a good thing, from any way you look. The last thing we
| need is more consolidation, and less competition, in this space.
| nickff wrote:
| It seems like it might be bad for computers, but good for
| embedded.
| gjsman-1000 wrote:
| On the other hand, a NVIDIA ARM acquisition could really spark
| RISC-V adoption. Maybe.
| Alupis wrote:
| There are very few positive signs Nvidia would be a good
| caretaker of ARM IP, continue to push new innovated and
| _open_ designs and mass adoption.
|
| Nvidia's entire business and philosophy regarding their chip
| designs are kind of antithetical to what ARM was achieving.
| GhettoComputers wrote:
| ARM was never good for open hardware designs.
|
| It wasn't better before what you think Nvidia will do
| either. Look at the state of Linux kernel updates on ARM
| chips.
| turminal wrote:
| You seem to be making a lot of bad faith arguments in
| this comment section.
|
| Why are you defending this deal so ferociously?
| LeifCarrotson wrote:
| Which is why the parent said that it would be good for
| RISC-V processors, not for ARM processors.
| gjsman-1000 wrote:
| All you have to see is NVIDIA's trashy effort on Linux and
| locking-down what-would-otherwise-be-open hardware from
| being usable by open-source drivers...
| GhettoComputers wrote:
| And ARM had constantly updated Linux kernels and drivers
| from Qualcomm before didn't they?
| monocasa wrote:
| ARM works very, very closely with the Linux kernel. The
| issues with updated code in the kernel isn't because of
| ARM CPU IP.
| dcow wrote:
| Since when do Nvidia and ARM compete?
| detaro wrote:
| Nvidia competes with other ARM customers.
| dcow wrote:
| But not with ARM... so instead of Softbank making royalties
| Nvidia makes them. I'm struggling to understand how this
| merger would eliminate competition, consolidate the market,
| and put consumers at risk of harm.
| detaro wrote:
| You really don't see how NVidia controlling what price
| their competitors have to pay for ARM technology and when
| they get access to it at all could have an impact on the
| market?
| dcow wrote:
| Right now SoftBank controls that price. If they could
| raise it and make more money off of ARM and piss on the
| market then why aren't they doing it? They're a business
| trying to maximize profits after all, it's in their
| interest regardless of who's competing for what.
| detaro wrote:
| Softbank doesn't benefit if it weakens one of their
| licensees. NVidia would benefit from weakening other ARM
| licensees, even if that would hurt ARM income.
| dcow wrote:
| I do see how this might be a conflict, thank you for
| pointing it out. In general I'm not convinced that those
| competitors couldn't just leave and use some other
| instruction set. If ARM is too important to business to
| be owned by a selfish company, then declare it public
| domain already...
| romwell wrote:
| >then declare it public domain already...
|
| Well that ship has sailed, as ARM is owned by the
| Japanese Softbank now.
|
| Previously, it was a UK firm, and now the UK is trying to
| introduce legislation to prevent this from happening
| again.
|
| ARM was UK's "oh shit" moment. That influenced their move
| to declare nuclear weapons industry "public domain", i.e.
| nationalize it:
|
| https://www.upi.com/Defense-News/2020/11/02/Britain-to-
| natio...
| mrlambchop wrote:
| A late, but potentially still well timed event that will tie up
| the deal through to next summer when the exclusivity period
| expires and SoftBank gets a 1.25B breakup fee.
| hn_throwaway_99 wrote:
| I think the comments along the lines of "This is weird, why
| wouldn't the US govt want a US company to own ARM?" are
| incredibly simplistic.
|
| First, it's at least possible that some government agencies
| actually do care about their charters and don't make it 100%
| about any one-sided geopolitical advantages. It's not hard to see
| how this deal will be bad for American consumers and businesses
| at large, and the FTC's purpose is to prevent that harm.
|
| But more than that, even if you _do_ take the position that they
| only care about realpolitik, the US government 's desire to reign
| in big tech is about the sole thing that has bipartisan support.
| This action is well in line with keeping big tech from usurping
| the power of government.
| dcow wrote:
| > It's not hard to see how this deal will be bad for American
| consumers and businesses at large, and the FTC's purpose is to
| prevent that harm.
|
| I am having a hard time understanding this. Care to explain
| rather than sidestepping and calling out my comment as overly
| simplistic? It seems the FTC is acting to protect businesses,
| not consumers. That's what I don't get.
|
| > This action is well in line with keeping big tech from
| usurping the power of government.
|
| "It's political" isn't really an explanation either. There's
| certainly something to discuss about at what point a company
| becomes too big and valuable, but that doesn't seem to be the
| stated motivation here. And I'd be interested in understanding
| what the framework is for applying those restrictions and how
| e.g. a company like Apple slid by without getting dismantled.
|
| EDIT: To put my confusion another way, at the end it says "The
| FTC acts when it has reason to believe the law has been or is
| being violated." What law has allegedly been violated or would
| be violated should this merger succeed?
| ScottBurson wrote:
| Here's Matt Stoller's explanation:
| https://mattstoller.substack.com/p/ftc-sues-to-block-
| nvidia-...
|
| I'm guessing "the law" is probably the Sherman Antitrust Act,
| which is still on the books, though enforcement went out of
| fashion in the 1980s. Seems to be making a comeback, though.
| dcow wrote:
| I follow Matt and often agree woth his takes. This short
| piece just seems to be a non-opinion.
|
| > This is Lina Khan's first major merger challenge. It is
| also a unanimous vote, and ironically, not all that bad for
| some of the key players in big tech.
|
| I think this key point is telling... Big tech has a big
| hold on our political-think.
| nnvvhh wrote:
| One thing the TFA says: "Because Arm's technology is a
| critical input that enables competition between Nvidia and
| its competitors in several markets, the complaint alleges
| that 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, harming the millions of
| Americans who benefit from Arm-based products, the complaint
| alleges."
|
| When a downstream firm merges with an upstream supplier that
| is really important to the downstream firm and its
| competitors, the merged firm can competitively hobble the
| downstream competitors. They can refuse to sell the upstream
| good to competitors, or raise the cost for competitors. Plus
| it may force the competitors (or potential new entrants) to
| vertically integrate themselves and enter both the downstream
| and upstream markets, which chills competition in the
| downstream market. The government also credits business
| justifications for the merger, and in the end they balance
| those with the potential harms to competition.
|
| The article (I can't find the complaint) also says, and this
| is a typical vertical merger concern, that this will give
| Nvidia (the downstream firm) access to sensitive information
| of Nvidia's rivals that they had previously shared with Arm.
|
| EDIT: There is also a general antitrust push in the Biden
| administration, notably in the appointments of Lina Khan and
| Tim Wu. Interesting to see its fruits.
| Bud wrote:
| It's shocking how just four years of Trumpism have made it
| difficult for Americans to even _imagine_ a US government
| agency actually doing its job, as it was intended to do.
|
| We now just automatically jump to assuming "fuck everything,
| except making more money and Mercuh".
|
| Sad.
| [deleted]
| dcow wrote:
| Strategically, why wouldn't the US gov't want a US company owning
| ARM? Why is the FTC pilling on to block this? How would I, as a
| consumer, be harmed by a graphics company owning an instruction
| set and design specification?
|
| Stopping two US companies from merging because it would create a
| monopoly and negatively impact US consumers is one thing. But
| this isn't even remotely the case here? Doesn't the US government
| get more tax revenue if Nvidia makes some extra dough charging
| royalties for that IP? I'm confused.
| ninth_ant wrote:
| The press release directly and prominently answers this
| question multiple times. It suggests that under Nvidia the new
| Arm would be disincentived to innovate in any area that
| negatively affects Nvidia businesses. Given that Arm is a
| critical supplier for many industries, this could result in
| consumer harm via "reduced product quality, reduced innovation,
| higher prices, and less choice"
|
| Also, I don't believe the FTC mission is to increase US tax
| revenue, so that aspect seems irrelevant.
| dcow wrote:
| And why is SoftBank any more positioned to be a champion of
| ARM quality? I just don't see how it would not be in Nvidia's
| interest to promote a healthy ARM any more or less than any
| other owner. Is the goal for ARM to become independent again?
| Are Nvidia's competitors making ARM graphics cards and SoCs?
| bobsmooth wrote:
| AMD decides it wants to make something like the TX1. Do you
| think that could happen if Big N owned ARM? Would the M1
| series have progressed as quickly knowing the bad blood
| between Apple and Nvidia? Softbank probably isn't the best
| management but its neutral.
| GhettoComputers wrote:
| Yes to both, if it's not competitive they'll use RISC-V
| or another architecture.
| dralley wrote:
| Changing architectures is no small thing regardless of
| how many times Apple has done it.
| dcow wrote:
| If ARM is truly too important to _the economy_ to be
| owned by a "selfish" business, shouldn 't we just declare
| it public domain and move on? Why can't Nvidia's
| competitors who they'd try to abuse and squeeze go use
| some other ISA? Is ARM really _that good_ , or is it just
| popular?
| [deleted]
| JumpCrisscross wrote:
| > _why wouldn't the US gov't want a US company owning ARM? Why
| is the FTC pilling on to block this?_
|
| The U.S. government isn't a monolith. FTC is charged with,
| first and foremost, maintaining our markets.
| romwell wrote:
| Also to add:
|
| Allowing nVidia to become a monopoly would bite the US in the
| ass strategically, as nVidia loses incentive to innovate.
|
| That's how the US, effectively, ended up having no viable
| aircraft when it entered WWI, after being the country that
| invented the thing. (Wright and Curtiss, IIRC, locked the
| market with patents).
|
| Or, more closely, how the US telecom/Internet infrastructure
| is atrocious, despite -- and because of -- the Internet and
| the telephone being invented here. Go figure, Ma Bell wasn't
| the bees knees.
|
| Strategically, the US needs someone to keep nVidia up on
| their toes. Innovation cuts into profit margins when you have
| a monopoly.
| gofigure wrote:
| Politically, 'big tech' is on the defensive and this is one way
| for FTC to show some teeth.
|
| That being said, nVidia is currently not playing in ARM's
| space, so it's hard to argue that this acquisition will harm US
| consumers or raise prices for them. Hence my feeling is that
| this is politically motivated, at least to some extent.
|
| Also, we (the US) are entering a period of intense competition
| with China that may last decades and may even include acts of
| war. Semiconductors are a key area of competition. More US
| control of key semiconductor assets is in the US interest.
| However to be totally fair that doesn't typically concern anti-
| trust law. But it should concern the current administration and
| drive some of these decisions about where to focus. It would be
| very different if this was about social networks and funny cat
| gifs.
| tw04 wrote:
| > That being said, nVidia is currently not playing in ARM's
| space, so it's hard to argue that this acquisition will harm
| US consumers or raise prices for them. Hence my feeling is
| that this is politically motivated, at least to some extent.
|
| Huh? They currently use arm designs in the Nintendo switch
| and their own shield line. They also utilize them in their
| mellanox Ethernet adapters and network switches. What makes
| you believe that won't give them a reason to increase prices
| for competitors that also use ARM chips, if not outright
| refuse to grant them a license?
| buu700 wrote:
| That was my exact reaction. I'm not sure how much I like Nvidia
| acquiring Arm, but on some level as an American my instinct is
| to encourage it.
|
| If it is the FTC's actual position that the deal would harm
| consumers or the industry as a whole, it's certainly admirable
| that they would ostensibly prioritize that over US strategic
| interests.
|
| This makes me wonder if their analysis shows that the merger
| would do sufficient harm within the industry as to actually run
| counter to US interests. If ARM is shaping up to become a
| pillar of the Western world/economy while China and its sphere
| of influence consolidate around RISC-V, then anything that
| harms Arm's market position is also a geopolitical risk to the
| West. The US government pushing for such a merger, at a time
| when China is investing heavily in semiconductor manufacturing
| capabilities while eyeing a conquest of Taiwan/TSMC, would
| therefore be shooting itself in the foot. Better to grow the
| pie than risk blowing it up for a slightly larger slice.
| mywittyname wrote:
| Their argument seems to largely be that ARM does not produce
| chips directly, but instead licenses designs to other firms
| using a "neutral, open licensing approach." They feel that this
| will stop should Nvidia acquire ARM.
|
| The also FTC contends that ARM induces competitive behavior in
| Nvidia. And a merger would stifle that competition.
|
| Additionally, and probably most importantly, the FTC contends
| that Nvidia's competition shares sensitive information with
| ARM. And part of what Nvidia is looking for with this
| acquisition is this information. I suspect this is the true
| reason behind the lawsuit; there's probably a good bit of
| industry support behind it.
|
| Personally, I'd rather ARM be owned by a massive American firm.
| And out of all the American firms who would be interested in
| ARM, Nvidia is the most likely to continue to innovate, rather
| than merely engage in rent seeking behavior.
| wahern wrote:
| > Strategically, why wouldn't the US gov't want a US company
| owning ARM
|
| It's worth noting ARM Ltd is a British company currently owned
| by a Japanese company. The U.K. and Japan are two of the
| closest, if not the closest, defense and industrial partners
| the U.S. enjoys. And unlike many U.S. allies, they're more-or-
| less close by choice. IOW, there's a deep reservoir of trust
| across the spectrum--military, legal, political. Both the U.K.
| and Japan tend to exercise their independence far more freely
| than other U.S. allies precisely because of the mutual respect
| afforded among the three. There's much less tension and
| apprehension among those three than as between, say, the U.S.
| and France. A critical supplier like ARM being in the hands of
| the U.K. and/or Japan is good enough from the perspective of
| the U.S., absent some extraordinary complicating context.
| theduder99 wrote:
| anything that would improve the US this admin does the opposite
| 90% of the time. look at the remain in mexico thing which was
| done away with and now after the epic border fail is going to
| be stood up again.
| russellbeattie wrote:
| You're not paying attention if you think Nvidia is just a
| "graphics company". As a chip supplier they are known to be
| aggressive to the point of bullying and their negotiations tend
| towards the extortion end of the business spectrum.
|
| I like Nvidia (because I don't have to work with them), but I
| don't think they are the right steward for ARM in any way.
| dcow wrote:
| So the headline should read: Nvidia too much of an asshole to
| own ARM? Let's update our laws too. I'm serious, if we don't
| want companies to be assholes then we'd need to regulate how
| they negotiate and a lot of other things.
| InTheArena wrote:
| Rule of law still matters. It's interesting to see how
| differently ARM is treated versus ARM China.
| [deleted]
| kwere wrote:
| is softbank (ARM owner) in need of cash?
| gjsman-1000 wrote:
| I wonder how much a business' valuation is determined by sale
| potential. If you have a business that is worth a lot, and yet
| nobody can or will buy it, how much is it really worth?
|
| Obviously it's still worth something, it's just that the
| valuation becomes really fuzzy except for the assets.
| ttt333 wrote:
| Formerly worked in Investment banking: it is a huge huge
| determinant of value.
|
| Particularly for a lower-dividend, higher growth company like
| Nvidia, the vast majority of the present value comes from the
| terminal value (what someone else will pay you for it when
| you're done holding the investment), made even more extreme
| by low interest rates.
| richardwhiuk wrote:
| Couldn't it transform into a high-dividend company?
| JumpCrisscross wrote:
| > _Couldn 't it transform into a high-dividend company?_
|
| This is cigarette-butt investing. It ignores terminal
| value. If the terminal value is already close to zero,
| it's the right move, an orderly wind-down and re-
| allocation of assets. If there _is_ terminal value, it 's
| a pillaging. Cases like these, where the terminal value
| starts looking more theoretical than practical, are how
| those incentives shift.
| shmerl wrote:
| Good. Nvidia is a pretty lock-in oriented and anti-competitive
| company in general. So them getting ARM would have been bad.
| GhettoComputers wrote:
| Any ARM hardware that isn't? Jetson was way more open compared
| to all other ARM hardware I know of.
| shmerl wrote:
| Mots are pretty bad I guess. For example Qualcomm is
| horrible.
| gjsman-1000 wrote:
| If I was working for Qualcomm... I would say that the FTC suing
| right now is almost maliciously late.
|
| Edit: So much so, that I would almost start my defense with
| claiming that the FTC's charges are in bad-faith.
| barbacoa wrote:
| It's surprising the US gov would take action to stop this. One
| one hand yes, this isn't great for the industry. But on the other
| it would mean that ARM will become an American owned company
| which gives the US government enormous new tech war leverage
| against China.
| htrp wrote:
| The arm china saga is already absolutely insane.....
| bogwog wrote:
| I wonder if vague fears about China are part of the reason the
| FTC has been sitting on their ass doing nothing about the tech
| industry for the past decade+?
|
| It would be ironic if true, because their failure to intervene
| has hurt America's ability to innovate and created
| opportunities for China.
| zarzavat wrote:
| It seems extremely unlikely that the UK will allow this deal
| anyway so it is somewhat moot what the FTC does.
|
| The original ARM sale to Softbank was made while everybody was
| distracted by Brexit, and is regarded as somewhat of an
| embarrassment. However Softbank appears to have played
| themselves because any attempt to sell ARM to a non-British
| owner will likely be denied as politically unacceptable.
| starfallg wrote:
| >However Softbank appears to have played themselves because
| any attempt to sell ARM to a non-British owner will likely be
| denied as politically unacceptable.
|
| Softbank gets to keep a cool $1.25 billion in cash from
| Nvidia if the deal falls through. It's standard M&A practice
| and so a win-win situation for them.
| nus07 wrote:
| https://www.newyorker.com/magazine/2021/12/06/lina-khans-bat...
|
| A rather long read but it's starting to make sense .
| 2OEH8eoCRo0 wrote:
| Came here to post the same thing. Very good read.
| blablabla123 wrote:
| This is the most megalomanic thing I've ever heard of. ARM has
| high chances to be both the next x86 and the most common embedded
| architecture. While at the same time Nvidia GPUs are already the
| de facto standard for GPU computing. So Nvidia would have
| monopolies in 2 verticals. No reasonable and competent antitrust
| commission could ever allow that - although probably everyone was
| betting the latter wasn't the case...
| xiphias2 wrote:
| I totally agree... what's interesting is that some of the
| reasons that FTC provide are totally not what's interesting
| (self driving).
|
| I have a MacBook Pro with M1 ARM chip, and I love it, it's
| extremely power efficient, I don't really have to think much
| about charging it. It wouldn't be possible if NVIDIA could
| force its chips on Apple.
| bobsmooth wrote:
| I'm conflicted. As an NVDA holder, I'm disappointed. As a tech
| lover, this is for the best.
| GhettoComputers wrote:
| Tegra from a tech lover standpoint is awesome. Nobody making
| ARM is good with drivers off the top of my head. Qualcomm with
| their shitty non updated drivers is BS compared to the updated
| Jetson.
| Dracophoenix wrote:
| Is it? Nvidia gave plenty of good examples of what it has been
| able to accomplish with ARM tech in their previous keynotes. If
| anything, I've come around from thinking this was simply a
| power play on Nvidia's part, to seeing this merger as a win-
| win-win for Nvidia, the ARM ISA, and ISA competition as a
| whole.
| bobsmooth wrote:
| Whatever neat things Nvidia is doing with ARM can be done
| with ARM being independent.
| GhettoComputers wrote:
| Can you show evidence of this?
|
| There has never been a good open ARM processor for mobile
| computing ever, the Jetson is the best open one while the
| Apple chips and M1 is the technically best one.
| bobsmooth wrote:
| You answered your own question. Nivida doesn't need to
| own the entirety of the mobile processor market.
| GhettoComputers wrote:
| So then they're no good reason to block it. They would do
| a better job than it currently it currently is in now,
| mobile processors aren't all ARM either.
| volta83 wrote:
| > DPU SmartNICs,
|
| Which other companies beyond NVIDIA sell DPUs ?
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