Nvidia takeover of Arm faces UK government intervention

LONDON – The UK government has intervened in Nvidia’s proposed takeover of chip designer Arm, worth $ 40 billion, for national security reasons.

UK digital secretary Oliver Dowden published a Public Interest Intervention Notice (PIIN) on Monday. It’s not clear what the national security reasons are, but the Department of Digital, Culture, Media and Sports said Dowden has “considered advice from officials across the community on investment security.”

Dowden said he wrote to the UK competition watchdog asking them to open a “Phase 1” investigation into the deal, which was announced in September.

The Competition and Markets Authority has been tasked with preparing a report for Dowden on the competition and national safety aspects of the business before July 30th. Dowden could then approve the deal, approve it under certain conditions, or make a more detailed request.

“After careful consideration of the proposed Arm takeover, I issued a notice of intervention today for national security reasons,” Dowden said in a statement. “As a next step, and to help me gather the relevant information, the UK Independent Competition Authority will now be preparing an impact report that will assist in further decisions.”

He added, “We would like to support our thriving UK tech industry and welcome foreign investment, but it is appropriate that we properly consider the national security implications of such a transaction.”

A spokesman for Nvidia said: “We do not believe this transaction will raise any significant national security issues. We will continue to work closely with the UK authorities as we have done since this deal was announced.”

Arm is being sold by SoftBank, which the company acquired without major problems for £ 24 billion ($ 33 ​​billion) in 2016. However, the new sale has raised concerns that Nvidia could be relocating Arm’s headquarters to the US and reducing competition in the semiconductor industry.

The ongoing global chip shortage has also shown the importance of semiconductors in today’s world. They are used in everything from smartphones and cars to fighter jets and other weapon systems. As a result, nations are striving to become more independent in chip production, which is currently dominated by China.

Arm was founded in the 1980s and licenses its chip designs to manufacturers around the world. Because of its neutrality, it is called the “Switzerland” of the chip industry. Chip makers, including Qualcomm, have raised concerns that Nvidia may attempt to block access to Arm’s technology, but Nvidia insists that such a move is not planned.

Jensen Huang, CEO of Nvidia, has pledged to keep Arm’s Cambridge headquarters and expand the company’s presence in the city.

The deal is also being scrutinized by regulators in the US, China and the European Union, and the question is whether it will be approved. Five industry sources, including two tech investors, told CNBC in February that they think the deal has a very high likelihood of being blocked by one or more regulators.

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