The UK government has stepped in to review the sale of chip designer Arm to Nvidia on national security as well as competition grounds.
Digital Secretary Oliver Dowden yesterday issued a Public Interest Intervention Notice (PIIN), which will require regulator, the Competition and Markets Authority (CMA), to begin a “phase one” investigation.
“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,” he said in a statement.
“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.”
Under the Enterprise Act 2002, the digital secretary has “quasi-judicial” powers to intervene in some mergers on public interest grounds.
The CMA now has until July 30 to complete and send its report to Dowden. After that time the secretary could clear the transaction, require remedies to the competition or public interest concerns, or refer it to a “phase two” investigation.
Depending on the outcome of that potential second phase of CMA work, the digital secretary could theoretically block the merger.
The CMA had already stated its intention to look into the proposed $40 billion deal on competition grounds after it was announced last September.
Despite Nvidia assurances that Arm’s HQ would not move from Cambridge and that it would maintain the chip designer’s neutrality, concerns have been raised not only in the UK but among many of Arm’s 500-odd customers about the deal.
The design and production of semiconductors are increasingly seen as strategically critical to countries’ national and financial security. Arm’s designs can be found in the vast majority of smartphones on the planet, including handsets from the likes of Apple and Samsung. Its chips also have uses in technologies related to defense.
America’s FTC is also looking at the takeover on competition grounds.
SoftBank acquired Arm for $32bn (£23bn) back in 2016.