UK government to examine Nvidia’s $40bn Arm deal

Oliver Dowden, the UK culture secretary, has called in the $40bn takeover of British chip designer Arm Holdings by US group Nvidia for further examination, citing potential national security grounds.

Dowden said that he had written to the Competition and Markets Authority to inform them of his decision and had instructed them to begin a “phase one” investigation to assess the transaction, which was first announced in September.

The competition regulator will prepare a report by the end of July with advice on jurisdictional and competition issues, as well as a summary of potential national security issues around the deal.

Then Dowden could clear the deal, approve it with certain conditions or launch a more detailed inquiry.

The latter would involve a “phase two” investigation for further scrutiny either on public interest and competition grounds, or on public interest grounds alone.

The culture secretary has powers under the Enterprise Act 2002 to intervene in certain mergers on public interest grounds.

Arm is being sold by SoftBank of Japan, which initially bought the semiconductor business in 2016. SoftBank’s decision to sell the group to Nvidia has raised concerns about whether the US group would keep its headquarters in Cambridge beyond the short term.

Jensen Huang, chief executive of Nvidia, has said he intended to retain Arm’s name while also expanding its base in Cambridge and keeping its intellectual property registered in the UK.

The deal raises potential security concerns because semiconductors underpin defence-related technologies.

“Following careful consideration of the proposed takeover of Arm, I have today issued an intervention notice on national security grounds,” said Dowden.

“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.”