U.K. Govt weighs in on Nvidia/Arm dealThe U.K. government intervenes in Nvidia’s proposed $40 billion takeover of chip designer Arm on national security grounds, and prices dump almost 5%.
The U.K. government has officially begun a formal security investigation into Nvidia’s plans to takeover British chip designer Arm because it believes the deal could have national security implications. In September 2020, Nvidia announced that it would be acquiring Arm for $40 billion to create the world's first premier computing company for the age of AI. Oliver Dowden, the UK’s Culture Secretary, on April 19 said that he had written to the Competition and Markets Authority to instruct them to begin a “phase one” investigation to assess the transaction. It is expected that the regulator will have a report ready by the end of July with advice on issues relating to jurisdiction and competition, and a summary of national security concerns.
“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.”
Set up in the 1980s, Arm is famously referred to as the “Switzerland” of the chip industry thanks to its neutrality is licensing its designs to manufacturers around the world. However, the potential security issues arise from the fact that semiconductors underpin key defence-related technologies – and there are concerns that Arm could eventually raise prices or hurt licensing services to Nvidia’s competitors. Arm’s supposedly neutral position as a supplier within the chip industry has already raised questions around the acquisition because of Nvidia’s existing competition with Arm rivals such as Qualcomm and Intel.
But Nvidia (unsurprisingly) downplayed the issue. A spokesperson noted:
“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.”