US government sues to block $40 billion Nvidia-Arm chip deal

The Federal Trade Commission has sued to block graphics chip maker Nvidia’s $40 billion purchase of chip designer Arm

The Federal Trade Commission on Thursday sued to block graphics chip maker Nvidia’s $40 billion purchase of chip designer Arm, saying the deal would create a powerful company that could hurt the growth of new technologies.

Nvidia Corp., based in Santa Clara, California, said in September 2020 that it was buying United Kingdom-based Arm Ltd. from Japanese technology giant Softbank to “create the world’s premier computing company for the age of AI."

But the deal immediately raised concerns that Arm would abandon its business model of licensing chip designs to hundreds of tech companies, including many of Nvidia’s competitors. Arm's chip designs power many of the world's smartphones.

“The FTC is suing to block the largest semiconductor chip merger in history to prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies,” FTC Bureau of Competition Director Holly Vedova said in a news release. “This proposed deal would distort Arm’s incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals.”