UK to investigate national security implications of Nvidia's ARM deal

The UK government is to investigate the national security implications of US tech company Nvidia's acquisition of British chip firm ARM Holdings, raising doubts over the $40 billion (€33 billion) deal. 

The deal was announced by Nvidia in September 2020, with the US firm pledging to keep ARM's neutrality intact, as well as offering guarantees that the staff and headquarters would remain in Cambridge.

Read more: UK tech company Arm Holdings sold to Nvidia in $40bn deal

Earlier this week, Digital Minister Oliver Dowden said that he had issued an 'intervention notice' over the sale, which saw Japan's SoftBank transfer ownership 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," said Dowden.

Nvidia, which is the US's largest chip company in terms of market capitalisation, has said that it does not believe the acquisition poses a national security threat for the UK.

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

ARM is a major force in global semiconductors, a sector that is crucial for a range of technologies from AI and quantum computing to 5G telecoms, to electric vehicles and smartphones.

Semiconductors also underpin a host of critical infrastructure in many countries and the technology falls into the category of being related to defence and national security issues, London has said, adding that security community officials had informed the decision to review the deal.

Read more: Nvidia to invest £40 million into UK's most powerful supercomputer

The next move will be for the Competition and Markets Authority (CMA) to look at the competition, jurisdiction and national security impact of the acquisition, and report by the end of July. 

Dowden will then make the decision whether to clear the deal - with or without further action from the companies involved - or to refer it for a longer, more in-depth investigation.

The CMA has already been looking into the acquisition deal, focusing on whether it could lead to a rise in prices or a reduction in services to customers that compete with Nvidia.

The deal, which has been under fire since it was first announced, puts a vital chip supplier for a number of silicon chipmakers under the control of a single, large player in the industry.

At the time, ARM's co-founder Hermann Hauser described the deal as an "absolute disaster" for the company and said that there were fears that it would destroy ARM's business model and lead to job losses.

Read more: The scramble to end the semiconductor shortage

As well as the concerns over national security, the deal has raised concern among other global tech companies such as Google, Qualcomm and Microsoft, at a time when several sectors are being hit by a worldwide semiconductor shortage.

While ARM, which is still based in the city of Cambridge, does not manufacture chips, it has created an instruction set architecture on which it bases computer core designs.

Its chip designs and technology is licenced to customers such as Apple, Qualcomm and Samsung.

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