Government puts foot down over Nvidia’s Arm takeover

The UK government has made an intervention in the proposed takeover of Cambridge-based computer chip design company Arm by US tech company Nvidia, citing national security concerns.

Oliver Dowden, the Secretary of State for Digital, Culture, Media and Sport, confirmed that he was stepping in and ordering the UK’s competition watchdog to start a 'phase one' investigation of the takeover deal.

In September, Nvidia – the largest chip company in the US by market capitalisation – announced that it would acquire a 90 per cent stake in Arm Holdings for $40bn, the company having previously been added to the SoftBank portfolio in 2016 for $32bn. While Nvidia said that Arm would continue to operate independently in the UK, in Cambridge, there are concerns that the acquisition will compromise Arm’s business model. Arm is one of the UK’s most successful and influential companies, designing the industry-standard chip architecture found in all types of computing devices, including devices essential for national security purposes. It has an open licensing model, which allows it to act as an independent, neutral supplier.

According to the security committee which advised the government to intervene in the deal, the critical importance of semiconductor technology to much of the UK’s critical national infrastructure renders this a national security matter.

Other concerns have been raised, such as that Nvidia may evade entering a legally binding agreement to retain Arm’s UK headquarters and that the acquisition may cause tensions with its Chinese customers.

Dowden said: “Following careful consideration of the proposed takeover of Arm, I have today issued an intervention notice on national security grounds. As a next step and to help me gather the relevant information, the UK’s independent competition authority will now prepare a report on the implications of the transaction, which will help inform any further decisions.

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

The regulator will advise the government on whether the acquisition could threaten competition in any UK markets and, if so, whether it should enter a more in-depth 'phase two' investigation. It is expected to submit its findings by the end of July.

A spokesperson for Nvidia commented: “We do not believe that this transaction poses any material national security issues. We will continue to work closely with the British authorities, as we have done since the announcement of this deal.”

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