LONDON – The UK government said it will replace Nvidia Corp. would investigate.‘s
NVDA -2.32%
A $ 40 billion deal to buy UK chip designer Arm from SoftBank Group Corp.
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on potential national security issues, adding new regulatory scrutiny to the proposed deal.
The deal – a combination of two of the world’s greatest chip designers – could reshape the chip industry. But the proposed combination has received intense scrutiny from regulators around the world, and allegations from Nvidia NVDA -2.32%
competitors that it could give the US company an unfair advantage in an increasing global race for chip knowledge and manufacturing capacity.
Based in Cambridge, England, Arm has long based its business model on partnering with as many companies as possible to deliver its chip designs. That philosophy led to those designs being incorporated into more than 95% of the world’s smartphones.
British digital secretary Oliver Dowden on Monday asked the country’s antitrust agency to investigate the national security implications of the merger and issue a report by July 30. The digital secretary can approve or cancel the deal with or without conditions.
The national security review comes on top of the agency’s previously announced plans to investigate the deal on antitrust grounds.
Nvidia Chief Executive Jensen Huang has previously said he supports keeping Arm’s business model open, but competitors have been skeptical. A spokesman for Nvidia said the company did not “believe this transaction poses material national security problems.” He said it will work with British authorities on the probe.
Nvidia shares were down about 1% in early New York trading. Nvidia executives were expecting a possible UK national security assessment when it agreed to buy Arm and factored that risk into what it said, an 18-month timeline for completing the deal, a person close to Nvidia said.
Nvidia agreed to buy Arm from SoftBank in September. That deal came about four years after SoftBank bought Arm for about $ 32 billion. Arm, founded in 1990 as a spin-off from a joint venture with Apple Inc.
designs blueprints for customers, including other chip companies, to make smartphone processors.
Write to Stu Woo at [email protected]
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