Nvidia Inc’s US$40bn takeover of UK microchip designer Arm may be blocked by the government for national security reasons, according to reports.
The US tech group has agreed to buy the business from Japan’s Softbank, but since it was announced in September, the deal has attracted a storm of criticism, initially on competition grounds but now apparently for national security issues as well.
According to Bloomberg, the government received a report from the Competition and Markets Authority on 20 July that as well as looking into the competition issues highlighted worrying implications for national security and that the UK was currently inclined to reject the takeover.
Sources at the office of Oliver Dowden, UK digital secretary, said a decision would be made “on the next phase of the investigation in due course”.
The news comes as two other UK defence companies are set to change hands, with US private equity-controlled Cobham accruing Ultra Electronics (LSE:ULE) and a bid this week for military vehicles group Meggitt PLC (LSE:MGGT) (LSE:MGGT) from US rival Parker-Hannifin Corp (NYSE:PH) sparking calls for all such military deals at least to be subject to much more scrutiny and potentially be blocked.
Nvidia boss Jensen Huang has said he wants to retain Arm’s name and expand its base in Cambridge.
Arm’s low energy chips are used on hundreds of devices globally and some competitors are worried about the implications if a leading chipmaker such as Nvidia takes it over.
Companies using the firm’s chips include Apple, Samsung, Qualcomm and MediaTek, with the group happy to license its chips to anyone willing to pay.
Nvidia said: “We continue to work through the regulatory process with the UK government. We look forward to their questions and expect to resolve any issues they may have.”