U.K. To Investigate Nvidia’s $40 Bln Arm Takeover On National Security Concerns

The U.K. government Monday said it would investigate Nvidia Corp.’s (NVDA) $40 billion deal to acquire British chip designer Arm from SoftBank Group Corp., over possible national security issues.

Digital minister Oliver Dowden said he had issued a Public Interest Intervention Notice over the sale of ARM by Japan’s SoftBank to Nvidia.

He has written to the Competition and Markets Authority (CMA) to inform them of his decision and has instructed them to begin a ‘phase one’ investigation to assess the transaction.

The CMA will now prepare a report with advice on jurisdictional and competition issues. The report will also include a summary of any representations it receives on potential national security issues arising from a consultation it will launch to gather third-party views.

“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 does not believe the deal poses any 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.

Last September, Nvidia announced its deal to buy business of UK-based Arm in a deal worth $40 billion. Arm develops and licenses intellectual property and software tools for chip designs.

However, it has attracted intense scrutiny from regulators around the world, while competitors have accused that the deal would give the U.S.-based chip maker an unfair advantage in the semi-conductor industry.

In January, CMA, the U.K. competition regulator, announced it would investigate Nvidia’s acquisition of Arm.

“The CMA will look at the deal’s possible effect on competition in the UK. The CMA 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,” CMA announced in a statement then.

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