UK Government issues intervention notice on Nvidia’s ARM acquisition

The Competition and Markets Authority (CMA) will return a report on the proposed sale by the end of July 2021

Oliver Dowden, Digital Minister for the UK, has issued an intervention notice regarding the purchase of British chip designer ARM by Nvidia.

The intervention notice gives the UK government the right to investigate the impact of the purchase on three different factors: competition, jurisdiction, and national security. The Competition and Markets Authority (CMA) will return a report on the proposed sale by the end of July 2021.

The $40 billion deal would transfer ownership of ARM from Japan’s SoftBank to Nvidia. SoftBank, which has encountered some financial difficulties of late, will gain the flexibility to gain some lost ground. Nvidia, on the other hand, will gain a future in the CPU arena – to bolster and expand its existing GPU lines of business.

The UK government’s concern stems from the fact that ARM has an influential position in the global semiconductor market; and semiconductors are critical to a variety of technologies that influence national security and defense initiatives.

ARM designs are also used in smartphones and consumer electronics, as well as for advanced tech including AI, big data, IoT, edge computing, 5G networks, and more. The implication of influence across these factors will likely be studied in the investigation from a national security perspective.

The CMA has also raised concerns about whether controlling ARM would allow Nvidia undue influence, as ARM is a supplier to a number of Nvidia’s competitors. These concerns are heightened in light of a global semiconductor shortage, which began as a production delay associated with the coronavirus pandemic. However, demand has increased over this time, making the shortage even more of a problem.

The concern is that if Nvidia controls semiconductor production they may have the ability to raise prices or limit access to competitors like Qualcomm, Microsoft or Google.

Nvidia has promised to maintain neutrality when the purchase is complete, and to remain headquartered in Cambridge.

Once the initial report is submitted in July, Mr. Dowden may either clear the deal to proceed or request a more in-depth investigation be conducted.