Dorries orders probe into £31bn Arm sale
MINISTERS have ordered a full-blown investigation into Nvidia’s £31bn swoop on chipmaker Arm in a move that could scupper the takeover.
The controversial deal will face more delays after Culture Secretary Nadine Dorries intervened on competition and national security grounds.
The US tech giant agreed to buy Cambridge-based Arm from Softbank last September.
But the planned tie-up has triggered uproar from Arm’s customers and is already under scrutiny in China, the US and EU.
Dorries believes it is crucial for the UK’s national security to maintain reliable access to Arm’s technology, the Government said in a letter yesterday, and that there are fears the Nvidia takeover could remove this. The
National Cyber Security Centre has also raised concerns about the deal, documents revealed yesterday.
Over the summer, UK regulator the Competition and Markets Authority (CMA) flagged concerns about what it could do to the wider semiconductor industry – saying it could stifle innovation, lead to less competition and drive up prices.
It also comes at a critical time as a global shortage of microchips is sending shockwaves throughout the manufacturing sector and slowing down production lines.
The CMA will now carry out the Phase Two investigation.
It has 24 weeks to complete this, though this could be extended by another eight weeks. The watchdog will have the power to block the takeover on competition grounds, while Dorries will be able to block it if it poses a security threat.
Dorries said: ‘The Government’s commitment to our thriving tech sector is unwavering and we welcome foreign investment, but it is right that we fully consider the implications of this transaction.’
Arm is seen as a jewel in the crown of the UK’s tech sector. It was spun out of a firm called Acorn Computers in 1990, and after years on the stock market was snapped up by Japan’s Softbank for £24bn in 2016.
Arm’s customers include Google, Samsung and Apple. Softbank licenses Arm’s designs to more than 500 companies which use them to make their own chips, which are used in 95pc of smartphones and in an array of other devices from cars to fridges that are connected to the internet.
More than 200bn chips have been made worldwide using its designs – and some 900 are produced per second.
Russ Shaw, founder of Tech London Advocates, said: ‘The UK was caught napping in 2016 when Arm was sold to Softbank – a sale which faced virtually no scrutiny and was a major failure of national security.’
A Nvidia spokesman said: ‘We plan on addressing the CMA’s initial views on the impact of the transaction on competition, and we will continue to work with the Government to resolve its concerns.
‘The Phase Two process will enable us to demonstrate that the transaction will help to accelerate Arm and boost competition and innovation, including in the UK.’