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Nvidia’s Arm deal investigated

Last week's news that the UK government had invoked 'National security' to probe Nvidia's Arm deal means that the CMA, which was already investigating the possible effect of the deal on competition in the UK, will also now be considering national security interests

While the ‘intervention notice’ issued by the government has raised questions over the $40 billion deal a spokesman for Nvidia said that it didn’t “believe that this transaction poses any material national-security issues,” and that the company was happy to work with the British authorities.

In fact, Nvidia executives were said to have expected a possible UK national-security review, although the use of this little invoked power may still have come as a surprise.

The intervention comes just five months after the UK government introduced new powers that were designed to prevent overseas companies from buying up sensitive assets, amid growing concern about the impact of China’s growing economic power.

Under the National Security and Investment Bill, companies have to notify the government about proposed deals in sectors that are deemed of strategic importance. Ministers have also got the power to scrutinise the acquisition of assets and intellectual property, as well as companies themselves.

Arm is a major player in global semiconductors and the move by Nvidia has worried many who see it as becoming the next US tech monopoly alongside Google, Facebook and Amazon.

Arm’s IP and technology is used across a broad range of technologies which are used to underpin critical national infrastructure.

Because of that, it appears that the UK security community had not only supported the decision to intervene, but had actively pushed for it.

The probe is just one of a number of examples in which governments around the world are tightening control over semiconductor technology – just last year the US led the way imposing export controls on Huawei.

The current global shortage of semiconductors also provides ample demonstration of just how important chips and their IP are to modern economies and more countries are said to be considering developing their own semiconductor industries.

According to Hermann Hauser, the founder of Acorn out of which Arm was created, if you have sovereignty, you will be able to independently run your economy without turning to another country for semiconductors.

The CMA will assess the competition, jurisdiction and national security impact of Nvidia's Arm deal, and a report is due by the end of July 30.

It’ll make interesting reading, not just about the deal but its implications for the global chip industry.

Neil Tyler

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