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Chips in on a Merger: The Arm-Nvidia Case

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  • Helena Perrone

Abstract

This paper analyzes the Nvidia-Arm vertical merger through the lens of the recent literature in Industrial Organization. It explores potential competitive concerns surrounding market foreclosure, technological access, and exclusionary behavior, considering the dynamic semiconductor industry’s intricacies. Although limited public information is available due to the parties halting the merger during phase two, I propose four theories of competitive effects addressing issues such as vertical foreclosure in dynamic markets, stifling of innovation due to hold-up concerns, and the ecosystem effects of the merger. This discussion sheds light on the potential impact of this merger in the semiconductor industry on competition in innovative high tech markets such as CPUs, datacenters, gaming consoles, and assisted driving.

Suggested Citation

  • Helena Perrone, 2025. "Chips in on a Merger: The Arm-Nvidia Case," CRC TR 224 Discussion Paper Series crctr224_2025_647, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2025_647
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp647
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    References listed on IDEAS

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    1. Marc Bourreau & Johan Hombert & Jerome Pouyet & Nicolas Schutz, 2011. "Upstream Competition between Vertically Integrated Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 59(4), pages 677-713, December.
    2. Michele Bisceglia & Jorge Padilla & Salvatore Piccolo & Shiva Shekhar, 2022. "Vertical integration, innovation and foreclosure with competing ecosystems," Post-Print hal-04931197, HAL.
    3. Marie-Laure Allain & Claire Chambolle & Patrick Rey, 2016. "Vertical Integration as a Source of Hold-up," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(1), pages 1-25.
    4. Chiara Fumagalli & Massimo Motta, 2020. "Dynamic Vertical Foreclosure," Journal of Law and Economics, University of Chicago Press, vol. 63(4), pages 763-812.
    5. Bisceglia, Michele & Padilla, Jorge & Piccolo, Salvatore & Shekhar, Shiva, 2022. "Vertical integration, innovation and foreclosure with competing ecosystems," Information Economics and Policy, Elsevier, vol. 60(C).
    6. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    7. Christopher Conlon & Julie Holland Mortimer, 2021. "Empirical properties of diversion ratios," RAND Journal of Economics, RAND Corporation, vol. 52(4), pages 693-726, December.
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    More about this item

    Keywords

    vertical merger; foreclosure; holdup; ecosystems; semiconductor industry;
    All these keywords.

    JEL classification:

    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • K2 - Law and Economics - - Regulation and Business Law

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