UK regulator presses pause on NVIDIA’s $40 billion Arm acquistion

The UK is invoking national security concerns to halt this merger.

What you need to know

• The UK has paused NVIDIA’s ARM acquisition while it opens an investigation into national security concerns.
• It will also seek advice from interested third parties as part of this probe.
• NVIDIA has committed to cooperating with the investigation.

NVIDIA’s Arm purchase has just hit a snag as the UK today announced that it would be halting the $40 billion deal pending the results of a probe.

The UK’s Competiton and Markets Authority, or CMA, will be investigating the transaction. It will then issue a report focusing on “jurisdictional and competition issues” alongside a summary of any representations it receives on potential national security issues arising from a consultation it will launch to gather third-party views. One might imagine Qualcomm and Graphcore would have a lot to contribute to the third party views section, for example. Qualcomm had reached out to the CMA, alongside the FTC snd European commissions over concerns that NVIDIA could restrict access to its IP from rivals. Alongside this, the UK government will delve into the national security implications, noting the implications of the purchase around 5G and AI, for example.

In a press release issued today, the UK’s Digital Secretary Oliver Dowden said:

Following careful consideration of the proposed takeover of ARM, I have today issued an intervention notice on national security grounds.

As a next step and to help me gather the relevant information, the UK’s independent competition authority will now prepare a report on the implications of the transaction, which will help inform any further decisions.

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.

As per Reuters, NVIDIA says that there are no national security concerns arising from its Arm purchase. A spokesperson added;

We will continue to work closely with the British authorities, as we have done since the announcement of this deal.

NVIDIA had announced its acquisition of Arm from Softbank last year, declaring its interest in leveraging Arms’s R&D prowess to help bolster its AI ambitions. Relevant to the UK’s interest, NVIDIA had committed to establishing a “world-class AI research and education center” in Cambridge, UK. It would also build a “state-of-the-art AI supercomputer” to attract researchers worldwide to the center.