The UK government has intervened in NVIDIA’s $40bn takeover of Arm.
The Cambridge-headquartered chipmaker, owned by Japanese giant SoftBank, revealed in September 2020 that it had agreed a sale to the American graphics chip specialist.
The world’s largest ever semiconductor deal is expected to complete in 18 months.
In January, the Competition and Market Authority said it would start a formal investigation later this year. The government has now instructed it to begin a ‘Phase 1’ investigation into specific considerations around competition, jurisdiction and national security.
Arm develops and licenses intellectual property and software tools for chip designs. The products and services supplied by the companies support a wide range of applications used by businesses and consumers across the UK, including desktop computers and mobile devices, game consoles and vehicle computer systems.
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The CMA said it is likely to consider whether, following the takeover, Arm has an incentive to withdraw, raise prices or reduce the quality of its IP licensing services to NVIDIA’s rivals.
Nvidia says it will retain Arm’s neutrality and keep its IP registered in the UK. However, two of Arm’s founders, Hermann Hauser and Tudor Brown, want the UK firm to remain “neutral” – avoiding a conflict of interest whereby its clients, which compete with Nvidia for sales, are dependent on a rival.
“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.”
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.”
The CMA will advise whether it would be appropriate to deal with any concerns through undertakings by the parties involved in place of a referral to a ‘phase two’ investigation.
The CMA has until midnight at the end of 30 July 2021 to complete and submit this report to the Digital Secretary.