UK government orders security probe into ARM Holding’s $40 billion sale to Nvidia

Digital Secretary Nadine Dorries has referred the deal to Phase Two investigation

PA Wire

Oscar Williams-Grut, City Editor @OscarWGrut16 November 2021

The UK government has called in ARM Holding’s $40 billion sale to US chip maker Nvidia on security and competition grounds.

Digital secretary Nadine Dorries on Tuesday ordered a ‘Phase 2’ investigation into the deal, citing “competition and national security grounds.”

Dorries said: “ARM has a unique place in the global technology supply chain and we must make sure the implications of this transaction are fully considered. The CMA will now report to me on competition and national security grounds and provide advice on the next steps.”

Cambridge-headquartered ARM designs microchips, which it then licenses to manufacturers. Its chip designs are used in everything from smartphones to fridges. It claims to be in use in 200 billion devices.

ARM is currently owned by Japanese investment company Softbank, which bought the company for $32 billion in 2016. Softbank agreed to sell ARM to Nvidia last September.

Dorries said: “The government’s commitment to our thriving tech sector is unwavering and we welcome foreign investment, but it is right that we fully consider the implications of this transaction.”

Hermann Hauser, ARM’s cofounder, began lobbying the government last year when the deal was first announced, urging them to block the deal. He worried that the sale to Nvidia could impact jobs and investment in the UK. Hauser said the sale could also threaten ARM’s industry neutrality as Nvidia manufacturers chips and devices of its own.

The phase two investigation by the UK’s Competition and Markets Authority could take up to 24 weeks. Dorries will then be called upon to make another judgment based on the final report.

A spokesperson for Nvidia said: “We plan on addressing the CMA’s initial views on the impact of the transaction on competition, and we will continue to work with the UK government to resolve its concerns.

“The Phase 2 process will enable us to demonstrate that the transaction will help to accelerate Arm and boost competition and innovation, including in the UK.”

ARM has been contacted for comment.