Arm’s Nvidia acquisition is now below assessment by the FTC

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The US has raised potential objections to Nvidia’s controversial acquisition of British chip design firm Arm from SoftBank, adding a new hurdle to a deal that has already generated serious opposition across the Atlantic.

News came a day after the UK opened an in-depth investigation into the transaction on grounds of competition and national security that American regulators shared European concerns. The European Commission started its own expanded review late last month.

Despite mounting signs that regulators might try to block the deal, Nvidia said Wednesday that it still “believes in the merits and benefits of the acquisition for Arm, its licensees and the industry.”

Nvidia announced the pushback from US regulators when it released its latest quarterly results to Wall Street late Wednesday. It said the Federal Trade Commission had “raised concerns” about the Arm deal and was in talks with the agency about “remedial action to address those concerns.”

The US chipmaker did not reveal what prompted the opposition or what concessions it had offered. The deal, announced 14 months ago, has drawn opposition from some large American tech companies who fear Nvidia will restrict their access to Arms chip designs, giving it an unfair advantage in large chip markets like data centers and automobiles.

According to someone familiar with his position, Nvidia has already made an offer to UK and EU regulators to guarantee Arm’s customers won’t be cut off or the list of Arm products they have access to be changed. But the offer was insufficient to prevent London and Brussels from proceeding with an expanded investigation, and the UK Competition and Markets Authority has said it does not believe such “behavioral” remedies can be effective.

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Nvidia could get another headache in China, where some local chipmakers have reportedly complained to regulators about the deal. The company said on Wednesday that formal antitrust proceedings had not even been initiated there, despite the fact that the deal had been “reviewed” by the Chinese authorities.

The mounting problems associated with the Arm acquisition haven’t weakened Wall Street’s recent craze for Nvidia. Its shares are up about 130 percent in the 14 months since the proposed deal was announced, bringing its market value to more than $ 730 billion.

The strong rally has raised the value of the cash and stock offering for Arm up to $ 76 billion, up from $ 38.5 billion when the deal was announced.

The latest earnings results showed that Nvidia’s gaming and data center chip businesses continued to flourish, with third-quarter revenues up 50 percent year over year and stocks rising 4 percent in the aftermarket.

Third quarter revenue reached $ 7.1 billion, or $ 270 million, above Wall Street’s expectations. Nvidia also forecast $ 7.4 billion in revenue, or $ 540 million above expectations for the fourth quarter, as it managed to contain the worst pressures in the chip supply chain that has hit other parts of the sector.

Nvidia’s after-tax earnings rose 84 percent to $ 2.46 billion, or 97 cents per share, in the most recent period. On a pro forma basis, Wall Street rates the company, earnings per share rose to $ 1.17, or 6 cents above expectations.

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