Last year, chip design company, ARM, was sold to Nvidia for 40 Billion USD. This was a massive deal that had immediate concerns for security, which has now driven the UK government to launch a probe that has halted the progress of this deal.
ARM, a UK tech company, was previously owned by Japanese run Softbank. The Digital Secretary, Oliver Dowden, stated that he wanted the implications of this deal to be assessed. “Following careful consideration of the proposed takeover, I have today issued an intervention notice… 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.”
The Implications of the Deal
ARM is the technology that is at the heart of the majority of smartphones and smart devices across the world, used by brands such as Apple, Samsung and Huawei. These are companies that are rivals to US owned Nvidia. There are worries that Nvidia could make ARM raise the prices or lower the quality of its services for Nvidia’s rivals. Dowden has ordered a phase one investigation, which could possibly lead to the deal being blocked. Nvidia shares dropped by 3.5% since the proposition of this investigation.
From the start, Nvidia has maintained that they have no intention of abusing their ownership of ARM,
“We do not believe that this transaction poses any material national security issues. We will continue to work closely with the British authorities, as we have done since the announcement of this deal.”
When the deal was proposed, over 2000 business leader’s signed a letter asking the Prime Minister to stop the deal, saying that UK jobs could be lost. To which Nvidia has promised that they will keep ARM based in the UK and to retain the brand as it is now, only aiming to improve it.
As it stands, with all the complaints coming from countries around the world, the future of the deal is uncertain at best.
The CMA will have until 30 July to submit its findings to the digital secretary.