Nvidia Facing Legal Trouble With $40 Billion Arm Acquisition

technology today

The tech space has seen unparalleled growth in the past months, and while supply chain shortages and restrictions have been quite the challenge to deal with, it hasn’t stopped emerging tech companies from powering through and the likes of Nvidia to see enormous growth.

In fact, given the trends toward metaverse development, further embracing artificial intelligence, and overall digital transformation, these companies are in some of the best positions this coming 2022.

However, if you can distinctly remember last year’s announcement of Nvidia’s plans to purchase Arm Holdings, they’ve just recently gone under intense scrutiny, not just from the European Commission but now also the Federal Trade Commission’s plans to sue as well.

And because Nvidia has become a leading example in the tech space, it’s about time we revisit their motives for their merger and just why this acquisition deal could create more problems than it can potentially solve.

This Merger Will Upset The Semiconductor Industry

One of the leading reasons behind regulatory bodies going against the deal and many competitors in opposition of further development is that this merger will undoubtedly upset the entire semiconductor industry. And, regardless of Nvidia’s promises to retain chip access neutrality for all intended purposes, there’s no guarantee of how well these policies will turn out in practice, not to mention the unfair advantage gained by Nvidia.

  • Conflicts Of Interest Undermining Competition:

    Firstly, there are apparent conflicts of interest on Nvidia’s end that will undermine competition and hurt the industry as a whole. Yes, there’s no denying that both companies don’t necessarily operate in the same market space. Still, we can’t overlook the fact that Arm’s open-licensing model and customer neutrality benefit Nvidia’s competitors. As a result, even with strict government regulations, the company could easily bypass and skew the guidelines to rule in their favor.

  • Bad For Future Innovation And Development:

    In addition to industry competitiveness, this also directly translates into damages for future innovation and development in the tech industry altogether. And while Nvidia might receive the largest portion of the pie, everyone else will be left with nothing on their plate because the market cap will be centralized in Nvidia’s dominating presence. As a result, companies will no longer have the incentive to innovate because most would not match the leading competition’s financial and technical capabilities.

  • Access To Sensitive Business Information:

    Last but not least, given that many of Nvidia’s long-term competitors have been working with Arm Holdings for the better part of their company history, this gives them access to sensitive business information. And even if regulatory bodies and legal teams try their best to orchestrate a merger that would avoid it from happening, the threat is inevitable and exposes extreme unfairness. Therefore, no matter if the two previous points are resolved, there’s always a catch that enhances Nvidia’s position.

But It’s Not Like Nvidia Needed Arm Holdings Anyways

Furthermore, despite all the talks and current development surrounding Nvidia’s deal with Arm holdings, the company has been doing very well for itself and blowing away forecasts with their most recent earnings report. So if the acquisition deal falls through and is highlighted for its competitive shortcomings, this doesn’t put a dent on Nvidia’s current bullish momentum that’s taking the technology sector by storm.

  • Share Prices Continues To Climb Higher:

    If you’re updated on the latest stocks gaining traction and outperforming analysis reports, then you wouldn’t be surprised to find out that Nvidia’s share prices have been going through the roof and could very well be still in its early stages of the bullish run. And if Nvidia can maintain the upward trend well into the 2nd and 3rd quarter of 2022, then it wouldn’t need the technical advantages provided by Arm’s infrastructure but reinvest their fundings to create their own.

  • Gaming Industry Doesn’t Fail To Shine:

    Apart from the general market sentiment taking a liking toward Nvidia, the company is operating in some of the most expected industries to experience growth in the next few years. For example, Nvidia’s hold on the gaming industry has been doing exceptionally well, and with its cloud gaming service rising in popularity, this will further support the bullish run. Plus, given that artificial intelligence technologies and data centers are increasing in demand, Nvidia will also see no shortage in its other customer bases.

Nothing’s Set In Stone, But Don’t Get Your Hopes Up

Overall, everything is still up for debate and speculation regarding the Arm acquisition deal. Still, if Nvidia faces legal action and receiving process servers for further lawsuits, you’re much better off not getting your hopes up. It might just be for the best that the merger doesn’t follow through so that competition and innovation in the tech space aren’t held down in a disadvantageous position.

Scroll to Top