Monday 19 April 2021 1:42 pm

UK launches national security review into Nvidia’s $40bn Arm takeover

The UK has launched a review into Nvidia’s planned $40bn (£30bn) takeover of British chipmaker Arm amid concerns it could harm national security.

Digital secretary Oliver Dowden today issued a public interest intervention notice (PIIN) relating to the proposed deal.

Cambridge-based Arm is one of the world’s leading semiconductor companies. Chips are key to technologies such as artificial intelligence and 5G, and also underpin critical infrastructure and are found in defence and security-related networks.

Dowden has written to the Competition and Markets Authority (CMA) and instructed it to launch a phase one investigation.

The watchdog will now prepare a report on jurisdictional and competition issues and will also summarise any views it receives relating to national security worries.

The government will launch a separate review to examine the national security public interests.

“Following careful consideration of the proposed takeover of Arm, I have today issued an intervention notice on national security grounds,” Dowden said in a statement.

“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.” 

A Nvidia spokesperson said: “We do not believe that this transaction poses any material national security issues.

“We will continue to work closely with the British authorities, as we have done since the announcement of this deal.”

Arm has been contacted for comment.

‘Selling the crown jewels’

The CMA had previously announced plans to launch a regular competition probe into the deal but is yet to start work on the case. It now has until the end of July to submit its report to the government.

Following the initial investigation, the digital secretary will decide whether to clear the transaction or require undertakings by the companies to remedy concerns.

Alternatively, he can refer the deal to an in-depth investigation for further scrutiny.

The government has issued several notices of this nature in the past, including over the £4.7bn takeover of Inmarsat in 2019.

It follows a fierce backlash over the takeover of Arm, with critics including Google and Microsoft pointing to potential competition concerns.

The proposed deal has sparked fears that Nvidia could block its rivals’ access to Arm’s intellectual property.

Nvidia has said it will retain Arm’s neutral licensing model and has pledged to keep the company headquartered in the UK. But Arm co-founder Hermann Hauser described it as a “disaster” for the UK.

Aside from competition concerns, opponents of the deal have raised concerns about the sale of British tech assets to foreign buyers.

Former business secretary Lord Peter Mandelson in October accused ministers of “waving the Union Jack while selling off the crown jewels”.

The transaction is also facing an in-depth investigation by the US Federal Trade Commission.