The British government has ordered an investigation of Nvidia’s proposed $40 billion acquisition of UK-headquartered chip designer Arm. The country’s competition regulator, the Competition and Markets Authority (CMA), will prepare an initial report on the takeover by the end of July, which will cover potential national security issues, as well as competition and jurisdictional issues created by the deal.
“I have today issued an intervention notice on national security grounds,” the UK’s digital secretary Oliver Dowden said in a statement. “The UK’s independent competition authority will now prepare a report on the implications of the transaction, which will help inform any further decisions.”
“IT IS APPROPRIATE THAT WE PROPERLY CONSIDER THE NATIONAL SECURITY IMPLICATIONS OF A TRANSACTION LIKE THIS.”
“It is appropriate that we properly consider the national security implications of a transaction like this,” he said. In its press release, the UK government notes that Arm is a key player in the global semiconductor market and that these are integral to the UK’s national infrastructure and security. Arm’s designs are also popular with smartphone processor manufacturers, with The Wall Street Journal noting they’re used in over 95 percent of devices sold worldwide.
Once the CMA presents its report, Dowden has the option of clearing the deal, imposing conditions to deal with any issues found, or ordering a “phase two” investigation, which would explore the deal in more depth. The digital secretary has the power to order an investigation like this in any deal involving the takeover of a company with more than £1 million in annual revenue where there may be public interest concerns.
“We do not believe that this transaction poses any material national security issues,” Nvidia said in a statement. “We will continue to work closely with the British authorities, as we have done since the announcement of this deal.”
Nvidia will not be the first foreign owner that Arm has had. It’s acquiring the company from Japan’s SoftBank, which has owned the chip designer since 2016.
Today’s announcement comes after the CMA initially said it was preparing to investigate the deal on competition grounds. “We will work closely with other competition authorities around the world to carefully consider the impact of the deal and ensure that it doesn’t ultimately result in consumers facing more expensive or lower quality products,” the CMA’s chief executive, Andrea Coscelli, said at the time. The US Federal Trade Commission is also reportedly reviewing the deal, according to Bloomberg.
As well as national security and antitrust issues, the Financial Times notes that concerns have been raised that Arm’s headquarters could be moved away from Cambridge by the US-based company. However, Nvidia CEO Jensen Huang has said his intention is to expand this base, keep Arm’s intellectual property registered in the country, and retain its current name.
Arm doesn’t manufacture chips; it provides designs to other chip manufacturers, including Qualcomm, Apple, and Samsung. Some of these companies have reportedly raised concerns about the acquisition to regulators that Nvidia could change how Arm licenses out its designs.