The UK government has intervened in Nvidia’s proposed $40 billion takeover of Cambridge-based chip designer ARM on national security grounds.
Under the powers afforded by the 2002 Enterprise Act, Digital Secretary Oliver Dowden has issued a Public Interest Intervention Notice (PIIN) and instructed the Competitions and Markets Authority (CMA) to begin a ‘phase one’ investigation into the transaction.
This process will not only identify any potential competition concerns but also summarize any possible security issues that might arise from the sale, given the growing influence of technology on UK interests.
The UK did not make similar demands ahead of Softbank’s acquisition of Arm back in 2016, but now believes new and emerging technologies such as 5G, AI and quantum computing to be important enough to the country’s economy and national infrastructure to warrant an intervention.
“Following careful consideration of the proposed takeover of ARM, I have today issued an intervention notice on national security grounds,” said Dowden.
“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 deal has attracted considerable attention since it was first announced last year, with many within the industry concerned ARM’s customer-neutral business model could be undermined if it was to fall into the hands of Nvidia, a leading chip manufacturer.
Tech heavyweights such as Google, Microsoft and Qualcomm have voiced their opposition, while competition regulators around the world have also taken an interest.
The CMA had already announced plans to investigate but had not yet started the process. Now it will be obligated to provide a report to Dowden by the end of July. He can then choose to clear the transaction, impose conditions to satisfy his concerns, or demand a ‘phase two’ investigation that will scrutinise the deal further.
“We do not believe that this transaction poses any material national security issues,” an Nvidia spokesperson told TechRadar Pro. “We will continue to work closely with the British authorities, as we have done since the announcement of this deal.”