Nvidia’s $ 40 billion arms deal faces FTC obstacles

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Federal Trade Commission Appealed Nvidia Corp, a US chip supplier. By SoftBank Group Corp. To thwart the $ 40 billion acquisition of Arm, a UK chip design provider backed by.

Holly Vedova, FTC’s Director of Competition, said the proposed vertical trading is a computing technology that relies on rivals of innovative next-generation technologies, including those used to operate data centers and vehicle driving assistance systems. He said he could provide control for chip makers that have an impact on the design. ..

The proposed deal will distort Arm’s chip market incentives and undermine Nvidia’s rivals.

All major chip makers are Arm customers, and companies such as Qualcomm Inc., Intel Corp., and Advanced Micro Devices Inc. sell chips that directly compete with Nvidia’s products. Bloomberg Report..

Apple Inc. And Amazon.com Inc. Also uses Arm technology for smartphones. The EU and UK are already scrutinizing the deal.

Analyst’s opinion

Citi analyst Atif Malik has reduced the trading probability from 30% to 5% after the FTC move.

Malik hopes Nvidia can offer possible remedies, including creating a “China wall” between the R & D engine and Arm’s business contract to alleviate antitrust regulatory concerns. , Finding potential in the future. He maintains a buy-back valuation for Nvidia shares with a $ 350 price target (up 8.9%).

“We’ve always said that the deal is unlikely to be approved,” said Matt Bryson, an analyst at Wedbush Securities. “We also believe that the investment community has almost the same opinion.”

Named for its video game graphics processor, Nvidia is now selling chips for everything from artificial intelligence to cryptocurrency mining. “This combo would have been too many,” said Chris Rolland, an analyst at the Susquehanna Investment Group.

Price action

Friday’s Nvidia shares closed at $ 306.93, down 4.46%.

Anusya Rahiri

© 2021 Epoch Times. The Epoch Times does not provide investment advice. all rights reserved.

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