Final nail? UK orders full national security investigation of Nvidia’s proposed acquisition of British chip designer ARM Holdings
The British government has ordered an indepth national security investigation, over Nvidia’s proposed $54 billion purchase of ARM Holdings.
British chip designer ARM is hugely important, as ARM designs power 95 percent of the world’s smartphones, and there is concern at ARM’s sale to a single chip supplier could give Nvidia too much leverage in the market.
Now the UK government has ordered a Phase two investigation of the deal, perhaps cementing the final obstacle in the chance that Nvidia could acquire the firm.
The UK’s Competition and Markets Authority (CMA) watchdog, and indeed the British government – have been leading reviews of the deal for a while now.
In January 2021 the CMA confirmed it would investigate Nvidia’s acquisition of ARM Holdings.
Three months later in April, the British government responded to the global pressure about the deal, and issued a ‘public interest intervention notice’ over ARM’s sale, citing national security implications.
And in August it was reported that after the CMA submitted its report to the British government about the matter on 30 July 2021, there were signs the deal would be blocked by the UK on national security grounds.
This was because the CMA reportedly said it had serious concerns about the deal, after it completed the initial “phase 1” probe.
Besides the UK and EU investigations, the US Federal Trade Commission (FTC) and even China’s State Market Regulatory Administration are said to be investigating the proposed deal.
This means the deal is now unlikely to be completed before the initial deadline of March 2022.
And now the UK government on Tuesday added to Nvidia’s headache, after it ordered an in-depth Phase Two investigation.
“ARM has a unique place in the global technology supply chain and we must make sure the implications of this transaction are fully considered,” digital secretary Nadine Dorries was quoted by Reuters as saying.
The UK reportedly said that while not all devices using ARM-based chips were necessarily classed as critical, the security and resilience of the broader supply chain was important for UK national security.
“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,” an Nvidia spokesperson told CNBC on Tuesday.
“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,” said the spokesperson.
The acquisition has been opposed by one of ARM founders, Tudor Brown, as well as Hermann Hauser (involved in the development of the first ARM processor when it was part of Acorn).
Both men said the company should not be sold to a semiconductor firm, but should remain a neutral supplier to the industry.
It should be remembered however that Japan’s SoftBank had acquired ARM for $32bn in 2016, which also prompted political concern in the UK at the time, with politicians urging the government to step in to ensure that ARM remained headquartered in Cambridge.
But the tech industry now remains concerned at ARM being acquired by Nvidia, and it’s proposed acquisition is opposed by tech giants such as Alphabet, Microsoft, and Qualcomm.
Google, Microsoft and Qualcomm all manufacturer their own inhouse processors, and depend upon ARM chip designs.
However in early July ARM’s CEO, Simon Segars, strongly defended the deal, and said it was the best outcome for the British chip designer, and was a better solution than an IPO.