Ministers are lining up a full-blown national security investigation into Nvidia’s planned $54bn takeover of British chip designer ARM, after months of negotiations between regulators and the US chip company.
The investigation is likely to be announced on Tuesday week, after digital and culture secretary Nadine Dorries orders a “phase 2” probe into Nvidia’s acquisition of Britain’s biggest technology company from Japan’s SoftBank.
In a move that threatens to block the takeover, which was agreed in September 2020, Dorries is set to instruct the UK’s competition watchdog (CMA) to carry out an in-depth inquiry into antitrust concerns, as well as investigate national security issues, The Times first reported.
Dorries’ predecessor, Oliver Dowden, first ordered the CMA to prepare a report on whether the deal could be deemed anti-competitive in April, along with a summary of any national security concerns raised by third parties.
In its findings, delivered in July, the CMA said it had “serious competition concerns” over the California-based company’s acquisition of ARM, which it said could “stifle innovation across a number of markets”.
The watchdog also warned that the deal could give Nvidia the power to weaken rivals by cutting of their access to ARM’s technology.
Although Dorries is mandated to accept the watchdog’s decision on competition, the decision surrounding national security concerns lies with the government.
The new probe will deliver a further blow to the US company, whose deal with ARM is already facing scrutiny by EU and Chinese regulators, too.
ARM’s currently powers the majority of the world’s computing devices, from smartphones to cars connected to the internet, and thus supplies the world’s biggest tech companies, such as Microsoft, Google and Apple.
Nvidia has argued that the buyout will benefit ARM’s finances and the industry as a whole and said it would maintain ARM as a neutral technology supplier, in an attempt to relieve concerns from its tech giant customers.