FTC to Block Nvidia-Arm Deal

Arm Acquisition

Over a year ago, in September 2020, Nvidia had announced a deal with SoftBank Group Corp., to acquire Arm Limited, in a transaction valued at $40 billion. [1]

Arm is a British semiconductor manufacturer whose chip designs are used in most mobile devices. It employees more than 6,000 people and has shipped more than 200 billion Arm-based chips. [2]

Nvidia had committed to maintaining the open-licensing model and global customer neutrality, but the deal immediately raised concern from regulators in multiple regions, as it can have huge ramifications in the semiconductor industry.

Regulatory Scrutiny

The bid for Arm has drawn scrutiny, with UK's Competition and Markets Authority (CMA) escalating to a Phase 2 probe into it in mid-November, on the grounds of competition and national security concerns. [3]

In late October, the European Commission had opened an in-depth investigation into the proposed acquisition, raising concerns that "the merged entity would have the ability and incentive to restrict access by NVIDIA's rivals to Arm's technology". [4]

The latest news though come from the United Sates, where the Federal Trade Commission (FTC) sued on Thursday December 2, to block the acquisition. [5]

FTC noted that "the proposed vertical deal would give one of the largest chip companies control over the computing technology and designs that rival firms rely on to develop their own competing chips", while calling the deal "the largest semiconductor chip merger in history".

Quarterly Earnings

Back in November and a few days following UK's phase 2 probe, Nvidia had reported blowout financial results for Q3 FY2022.

Total Revenues had risen to a record $7.1 billion, with $2.94 billion of them generated by the Data Center business, but Cryptocurrency Mining Processor (CMP) sector was a source of disappointment.

Stock Movement

The stock price had reacted positively to the company's impressive quarterly results and registered record highs, stopping at 346.38 on November 22. Since then it has faced headwinds, also weighed by the Omicron Covid-19 variant, which has wrecked havoc to global markets and the Nasdaq.

Following November's all time high's, NVDA.us has posted a shallow correction, which was contained by its EMA100 and the 23.6% Fibonacci of the "October Low/November High" rise, which maintains the upward bias. This gives it has the right to push or fresh December highs (33.20-40), but new record high may prove harder under current conditions.

Now we will wait to see how NVDA.us will open today, as the FTC's complaint has the potential to push it lower. Such a scenario can lead to a breach of the broader 313.00-308.51 area, while closes below it, can open the door for a deeper correction towards 288.66-287.41.


Past Performance: Past Performance is not an indicator of future results.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 03 Dec 2021 https://nvidianews.nvidia.com/news/nvidia-to-acquire-arm-for-40-billion-creating-worlds-premier-computing-company-for-the-age-of-ai

2

Retrieved 03 Dec 2021 https://www.arm.com/company

3

Retrieved 03 Dec 2021 https://www.gov.uk/cma-cases/nvidia-slash-arm-merger-inquiry#terms-of-reference

4

Retrieved 03 Dec 2021 https://ec.europa.eu/commission/presscorner/detail/en/ip_21_5624

5

Retrieved 17 Aug 2022 https://www.ftc.gov/news-events/news/press-releases/2021/12/ftc-sues-block-40-billion-semiconductor-chip-merger

Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.

Risk Warning: Trading Margin FX/CFDs carries a high level of risk, and may not be suitable for all investors. Leverage can work against you. By trading, you could sustain a total loss of your deposited funds but wholesale clients could sustain losses in excess of deposits.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}