FTC takes legal action to block Nvidia's takeover of Arm

The US Federal Trade Commission has taken legal action to block chipmaker Nvidia's proposed $40.0bn takeover of Cambridge-based chip designer Arm, citing competition concerns.

The FTC said the deal, which would give Nvidia control over the technology and designs that competitors depend upon to develop their own products, could potentially lead to a chip conglomerate that would stifle the innovation pipeline for next-generation technologies.

"Tomorrow's technologies depend on preserving today's competitive, cutting-edge chip markets," said the FTC's Holly Vedova.

"This proposed deal would distort Arm's incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals."

California-based Nvidia, which warned last week that it was at risk of losing a $1.25bn downpayment if the takeover falls through, stated: "As we move into this next step in the FTC process, we will continue to work to demonstrate that this transaction will benefit the industry and promote competition."

The deal was first announced in September 2020 and has already faced in-depth investigations by Britain's Competition and Markets Authority and another in the European Union.

As of 1015 GMT, Nvidia shares were down 0.49% in pre-market trading at $319.69 each.