Great Britain

UK government orders investigation into Nvidia’s $40bn Arm takeover

The UK government has stepped in to order an investigation of Nvidia’s $40bn takeover of the Cambridge-based chip designer Arm, citing potential national security concerns.

Oliver Dowden, the UK culture secretary, has written to the Competition and Markets Authority (CMA) instructing it to begin a “phase one” investigation into the deal, which was announced in September.

The competition regulator will prepare a report by the end of July with advice on jurisdictional and competition issues, as well as a summary of any representations on potential national security issues that arise from its consultation.

The government said that it will examine the national security issues alongside the CMA’s process.

“Following careful consideration of the proposed takeover of Arm, I have today issued an intervention notice on national security grounds,” Dowden said. “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 phase one investigation will ensure specific considerations around competition, jurisdiction and national security are assessed.”

Dowden, who has quasi-judicial powers to intervene in certain mergers on public interest grounds, has the power to clear the deal, approve it subject to certain undertakings or ask the CMA to launch a more detailed phase two investigation.

Arm Holdings, which employs 6,500 staff including 3,000 in the UK, is a global leader in designing chips for smartphones, computers and tablets. California-based Nvidia, a graphics chip specialist, announced its plan to buy the British tech group from Japan’s SoftBank in September.

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In January, the CMA said that it would look to investigate the possible effect of the deal on competition in the UK and whether Arm had an “incentive to withdraw, rise prices or reduce the quality of its intellectual property licensing services to Nvidia’s rivals”.

In October, Hermann Hauser, the co-founder of Arm, wrote to the House of Commons foreign affairs committee arguing that if the deal was allowed to proceed, the combined business would become the next US tech monopoly alongside companies such as Google, Facebook and Amazon. He also told the BBC last year that the deal would be “an absolute disaster for Cambridge, the UK and Europe”.

In the US, the Federal Trade Commission is also looking at the takeover on competition grounds.

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