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UK considers blocking Nvidia’s takeover of Arm over potential national security risks

  • An assessment from the Competition and Markets Authority raises security concerns and the UK is planning a deeper review of the deal
  • Specific security concerns have not been made public, but US restrictions on trade with China already impact Arm business

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The Nvidia logo shown at SIGGRAPH 2017 in Los Angeles, California, on July 31, 2017. Nvidia is the largest chip company in the US by revenue and is seeking to acquire UK-based Arm, whose chip designs power most smartphones. Photo: Reuters
Bloomberg

The UK is considering blocking a takeover of Arm Ltd by Nvidia Corp due to potential risks to national security, according to people familiar with the discussions.

Nvidia, the biggest US chip company by market capitalisation, announced in September a US$40 billion deal to acquire Arm from Japan’s SoftBank Group Corp, as part of a push to spread its reach in the surging market for semiconductors. SoftBank has been selling assets to raise cash for buy-backs and fresh investments in start-ups.

In April, UK Culture Secretary Oliver Dowden asked the Competition and Markets Authority (CMA) to prepare a report on whether the deal could be deemed anticompetitive, along with a summary of any national security concerns raised by third parties.

The assessment, delivered in late July, contains worrying implications for national security and the UK is currently inclined to reject the takeover, a person familiar with government discussions said. The UK is likely to conduct a deeper review into the merger due to national security issues, a separate person said.

A photographer taking pictures in front of the logo for British chip designer Arm in Taipei on May 27, 2019. Photo: AFP
A photographer taking pictures in front of the logo for British chip designer Arm in Taipei on May 27, 2019. Photo: AFP

No final decision has been taken, and the UK could still approve the deal alongside certain conditions, the people added. Dowden is set to decide on whether the merger needs further examination by the UK’s competition authorities.

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