UK invokes national security to probe Nvidia’s ARM deal

The UK government will look into the national security implications of US group Nvidia’s purchase of British chip designer ARM Holdings, it said on Monday, putting a question mark over the $40 billion deal.

Digital minister Oliver Dowden said on Monday he had issued a so-called “intervention notice” over the sale of ARM by Japan’s SoftBank to Nvidia.

“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.

Nvidia said it did not believe the deal posed 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,” said Nvidia, the biggest US chip company by market capitalisation.

ARM is a major player in global semiconductors, a sector that is fundamental to technologies from artificial intelligence and quantum computing to 5G telecoms networks.

Semiconductors also underpin Britain’s critical national infrastructure and are in defence and national security-related technologies, the government said, adding officials from the security community had informed the decision to intervene.

The Competition and Markets Authority will assess the competition, jurisdiction and national security impact of the deal, with a report due by July 30, the government said.

Dowden will then decide whether to clear the deal, either with or without undertakings from the companies involved, or refer it for a longer, in-depth investigation.

The takeover, which was announced in September, puts vital supplies to multiple silicon chip makers under the control of a single player.

ARM, which was founded and is still based in Cambridge, England, does not make chips but has created an instruction set architecture on which it bases designs for computing cores.

Its chip designs and technology is licensed to customers such as Qualcomm Inc, Apple and Samsung Electronics Co Ltd.