Tuesday, 11 May 2021

UK 'intervenes' in Nvidia’s $40bn takeover of Arm

by Harry Baldock, Total Telecom
Tuesday 20 April 21

Digital Secretary Oliver Dowden has issued an ‘intervention notice’, with the Competitions and Markets Authority (CMA) set to begin ‘phase one’ of an investigation

Back in September, SoftBank Group agreed to sell UK chip designer Arm to US rival Nvidia for a mammoth sum of $40 billion. The deal caused almost immediate consternation in the UK, with various players within the industry lobbying the government to block the deal, saying it would harm UK jobs and the country’s technical capabilities on the world stage. Indeed, Arm’s co-founder…

Back in September, SoftBank Group agreed to sell UK chip designer Arm to US rival Nvidia for a mammoth sum of $40 billion. The deal caused almost immediate consternation in the UK, with various players within the industry lobbying the government to block the deal, saying it would harm UK jobs and the country’s technical capabilities on the world stage. Indeed, Arm’s co-founder, Hermann Houser, even argued that the move would be akin to “making Britain a vassal state”.
 
In January, the CMA announced that it was looking into the deal, with suggestions that Arm’s purchase could lead to a rise in costs or even withdrawn access of Arm tech for Nvidia’s rivals. Now, the Digital Secretary is calling for a ‘phase one’ investigation of the deal on national security grounds.
 
“Following careful consideration of the proposed takeover of Arm, I have today issued an intervention notice on national security grounds,” said Dowden. “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.”
 
While Arm itself has yet to comment on this development, Nvidia appears unphased, promising its support for the investigation process.
 
“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.”
 
Upon first inspection, it seems odd that the CMA would take such interest in a deal between the Japanese company SoftBank and US tech giant Nvidia. Indeed, when Arm was first sold to SoftBank back in 2016 for around $31 billion, there was no such investigation, with many celebrating the move as a vote of confidence in the UK tech industry.
 
But in 2021, the geopolitical landscape has changed. Tensions between the US and China have risen the record levels, while the impact of the coronavirus has led to huge disruption of the semiconductor industry, a sector of growing strategic importance worldwide. At the same time, the government’s willingness to intervene in the free market is appearing to rise, especially when doing so could have implications for national security and technological sovereignty; just look at last year’s £400 million bailout of struggling satellite firm OneWeb.
 
Thus, while Nvidia seems unperturbed by this early stage of the investigation itself, the decision does add yet layer of complexity to a deal already mired in controversy. The closing of the deal is by no means certain.
 
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