[HN Gopher] FTC Sues to Block $40B Semiconductor Chip Merger ___________________________________________________________________ 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 ? ___________________________________________________________________ (page generated 2021-12-02 23:00 UTC)