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Nvidia’s takeover of $ 40 billion Arm faces a UK national security investigation


The UK has opened an official investigation into Nvidia’s $ 40 billion acquisition of chip designer Arm, after the government said the deal could have an impact on national security.

Digital Secretary Oliver Dowden on Monday issued an intervention of public interest related to the proposed deal and asked the UK Competition and Markets Authority (CMA) to prepare a report on the impact of the deal.

“After carefully reviewing the proposed takeover of Arm, today I issued an intervention notice for national security reasons,” Dowden said in a statement.

“We want to support the UK’s thriving tech industry and welcome foreign investment, but it is appropriate that we must consider the national security implications of a transaction,” he added. like this”.

Stocks in Nvidia
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-3.63%

fell more than 2% at the start of trading on Monday.

Also read: Tenders to acquire British companies became more difficult as ministers closed back door takeovers from countries such as China, Russia and the United States.

Santa Clara, California-based Nvidia has signed an agreement with Japan’s SoftBank Group
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-0.74%

in September 2020 to buy Arm, in a move designed to transform the global semiconductor landscape. Arm licenses his chip designs to companies including Apple
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+ 0.42%
,
Amazon
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,
Samsung and Qualcomm
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,
Use these chips to power device processors globally.

As a neutral supplier, Arm supplies critical chip technology to many customers, including rivals Nvidia, and Nvidia has pledged not to change this business model. Nvidia has also promised to add its own technology to the portfolio of intellectual property Arm can license.

Critics have also warned that Nvidia, in July 2020, overtook Intel
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as America’s most valuable chipmaker by market capitalization, it would be too dominant if the Arm acquisition was approved.

CMA conducted a standard investigation of the deal in January, saying it was “likely to consider whether, after taking over, Arm had an incentive to withdraw, raise prices or decrease quality of service level. Whether or not it allows its IP to be given to rivals Nvidia.

More: Increased pressure on the UK to meddle in Nvidia’s $ 40 billion acquisition of Arm

Competition watchdog has a deadline until July 30 to complete and submit its report to the digital secretary, who will green light for the takeover, approving it under some of the most conditions. design or recommend it for further consideration, on a public and competitive basis or on a public interest basis alone.

An Nvidia spokesperson said the company does not believe the transaction poses any significant national security issues. “We will continue to work closely with British authorities, as we have since announced this agreement,” added the spokesperson.

British meddling in the deal comes just five months after the government introduced new powers to prevent foreign companies from buying sensitive assets in the country, amid growing concerns about the impact. of China’s growing economic might.

Under the National Security and Investment Bill, companies will have to notify the government of proposed transactions in 17 areas deemed of strategic importance, including machine handling units. computer and artificial intelligence. Ministers are also empowered to scrutinize acquisitions of intellectual property and property, as well as the companies themselves.

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