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UK announces national security investigation into Nvidia’s $54 billion arms deal

The UK government has launched an in-depth investigation into Nvidia’s takeover of UK-based technology company Arm for reasons of national security, creating another obstacle on the path to a $54 billion deal. .

Digital and Culture Secretary Nadine Dorries has ordered a phase 2 investigation into this transaction in the public interest, meaning it will now be subject to a full investigation into antitrust issues. rights and security. The UK’s competition watchdog discovered “serious competition concerns” with the deal in July.

In a letter to the parties published Tuesday, the government said: “The Secretary of State believes that the ubiquity of Arm technology makes Arm IP’s accessibility and reliability essential to national security. family.”

Arm’s chip design is used by most smartphone manufacturers.

The government said the National Cyber ​​Security Center had also identified “several potential threats to national security” posed by deal.

In a statement, Dorries said Arm has “a unique position in the global technology supply chain and we must ensure that the implications of this transaction are fully considered”.

Nvidia agreed to buy Cambridge-based Arm – once one of the crown jewels in Britain’s tech sector – from Japan’s SoftBank last year in the industry’s biggest-ever deal. global semiconductor. The bid has since been bogged down by regulatory investigations in the UK, Brussels and China, forcing Nvidia to admit in August that it was unlikely to close the deal within 18 months as it had hoped.

Nvidia said on Tuesday: “We plan to address the CMA’s initial views on the impact of the transaction on competition, and we will continue to work with the UK government to address these issues. their concerns.” It said the deal would “help accelerate Arm and promote competition and innovation, including in the UK”.

Arm’s design is for used devices including smartphones, smart TVs and self-driving cars, and is heavily reliant on Nvidia’s competitors – something regulators find has problem. The Competition and Markets Authority found “Serious Competition Concerns” with the deal in the summer, claims Nvidia could harm competitors by cutting off access to Arm’s technology or raising prices. Nvidia has promised to maintain an open licensing model, and chief executive Jensen Huang said he has no intention of “restricting” Arm’s supply to any customer.

The CMA will now have 24 weeks to conduct an investigation before submitting a final report to the government and could extend that time by eight weeks.

Regulatory bodies in the EU also interested that Nvidia could undermine its rivals and stifle innovation through the acquisition of Arm. The deadline for that probe is March 15, 2022, although it could be extended, pushing back the duration of the deal.

Launching the investigation last month, Margrethe Vestager, EU Executive Vice President for Digital and Competition Policy, said: “Our analysis shows that the acquisition of Arm by Nvidia could lead to to limited or impaired access to Arm’s IP, with misleading effects in many markets where semiconductors are used. ”

Despite the regulatory pressure, Masayoshi Son, chief executive officer of Arm’s Japanese owner SoftBank, told investors earlier this month that he hoped the deal would go through. On an earnings call, he said: “Regulators want a very thorough review and they’ve entered the second phase, but I still believe that review will be successfully completed.” .

Additional reporting by Javier Espinoza in Brussels

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