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UK Government Orders Investigation Into Nvidia's Arm Acquisition

NVIDIA Plus ARM Graphic Acquistion Retouched AHDB20
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The UK government has ordered an investigation of Nvidia’s $40 billion acquisition of British chip designer Arm. The Secretary of State for Digital, Mr. Oliver Dowden, has issued a Public Interest Intervention Notice (PIIN) in relation to the proposed deal, citing national security concerns.

British competition regulator, the Competition and Markets Authority (CMA), will now initiate a “phase one” investigation of the deal. CMA will prepare a report on the competition and national security aspects of the proposed multi-billion transaction between Nvidia and Arm by the end of July this year, with advice on jurisdictional and competition issues. The UK government will also examine the national security public interests.

Once the CMA submits its initial report, Mr. Dowden will decide the further steps – whether to clear the deal, resolve any concerns found through undertakings by the parties involved, or order a “phase two” investigation.

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If CMA’s “phase one” investigation finds that there are no public interest concerns but there are competition concerns that cannot be resolved by undertakings, the regulatory body will independently deal with the proposed acquisition as any other merger case.

However, if there are public interest concerns, CMA’s “phase two” investigation will examine the deal in more depth. The regulatory body will then make recommendations as to what the Digital Secretary should do to resolve, mitigate or prevent any adverse effects.

“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,” Mr. Dowden said. He noted that semiconductors are fundamental to various current and future technologies and underpin the UK’s critical national infrastructure.

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The UK to investigate Nvidia’s Arm acquisition on national security grounds

Nvidia announced in September last year that it’s acquiring Cambridge-based chipmaker Arm from its Japanese owner SoftBank for $40 billion. However, since Arm is a neutral chipmaker that supplies chips to companies that Nvidia directly competes with, such as Qualcomm and Intel, the proposed acquisition raised competition concerns.

The United States Federal Trade Commission is already investigating the deal in depth. The American regulatory body reportedly has sent information demands to third parties. Moreover, UK’s CMA is also preparing to launch a separate investigation into the proposed deal. This investigation looks into competition aspects of the deal and is different from the one ordered by the Digital Secretary. The latest investigation, meanwhile, looks into the national security and public interest aspects of the matter.

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

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