On August 3, according to people familiar with the matter, the UK is considering blocking Nvidia’s acquisition of Arm Ltd. because of possible national security risks. Nvidia is the largest chip company in the US by market capitalization.
In September last year, Nvidia announced that it would spend $40 billion to acquire Arm, which is currently owned by Japan’s Softbank Group. This move is part of Nvidia’s efforts to enter the booming semiconductor market.
In April of this year, the British Minister of Culture Oliver Dowden asked the Competition and Markets Authority (CMA) to prepare a report stating whether the transaction might be considered anti-competitive behavior and outlining any national security claims raised by third parties.
People familiar with the matter said that the assessment report submitted at the end of July has had a worrying impact on British national security, and the UK is currently inclined to refuse acquisitions. Another person familiar with the matter said that due to national security issues, the United Kingdom may conduct a more in-depth review of the merger.
People familiar with the matter also said that the final decision has not yet been made, and the UK may still approve the agreement with certain conditions. Dawden will decide whether to accept a further review by the UK competition regulator.
An Nvidia spokesperson said in a statement: We will continue to cooperate with the British government through regulatory procedures. We look forward to their questions and hope to resolve any issues they may have.
Nvidia shares fell 2.7% on Tuesday, but then quickly reversed the decline and turned up. If regulators block this transaction, it will hinder Nvidia’s ability to dominate the computing chip market, but we believe that investors have low expectations of whether this transaction can be completed, said Anand Srinivasan, BI senior semiconductor industry analyst.
A CMA spokesperson declined to comment. A British official declined to comment. In the $400 billion chip industry, Arm has the most widely used set of standards and designs. Its technology is the world’s most smartphone core and is playing an increasingly large role in computing, including servers running machine business and government systems.
The Cambridge-based company has always played a neutral role, selling chip blueprints and licensing its standards to a wide range of major technology companies, many of which are fierce competitors. Japan’s SoftBank acquired Arm in 2016, and there is no overlap with Arm’s customers. Softbank’s ownership retains this neutrality.
It is still unclear how the transfer of Arm’s ownership from Japan to the United States will affect Britain’s national security. However, since the acquisition of SoftBank, semiconductor technology has become a new focus of political attention.
