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UK intervenes in Nvidia's takeover of Arm on national security grounds

The chip industry's largest-ever deal is under scrutiny.

Logos for Arm and Nvidia

The Arm-Nvidia deal was announced in September 2020.

Pavlo Gonchar/SOPA Images/LightRocket via Getty Images

The UK government on Monday raised its objections to Nvidia's takeover of chip designer Arm, in part due to national security concerns. UK Digital Secretary Oliver Dowden said that the country's competition watchdog, the CMA, would look into the proposed sale of Arm, which has its headquarters in the British city of Cambridge, to explore the any national security implications for the UK.

"Following careful consideration of the proposed takeover of ARM, I have today issued an intervention notice on national security grounds," said Dowden in a statement. "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."

"We do not believe that this transaction poses any material national security issues," said a spokesman for Nvidia in a statement. "We will continue to work closely with the British authorities, as we have done since the announcement of this deal."

Japanese tech giant SoftBank agreed to sell Arm to Nvidia back in September 2020 as part of $40 billion deal -- the chip industry's largest. Arm isn't as well-known as mega chip companies such as Qualcomm and Intel, but its work lies behind the processors inside many of the world's mobile phones.

SoftBank purchased Arm in 2016 for $32 billion with the intent of bolstering its internet of things division. Nvidia said it expects the tie-up, which will give SoftBank an ownership stake in Nvidia, to boost its artificial intelligence ambitions.

The Public Interest Intervention Notice issued by Dowden on Monday initiates a phase one investigation, which is designed to ensure that all the implications of the deal have been thought through. If the investigation raises no concerns on either public interest or competition grounds, the notice can be cleared and the deal can proceed. But if the investigation does raise concerns, the deal could later be blocked as part of a phase two investigation.