The chances the UK will stop Nvidia from buying Arm are growing. On Tuesday, the country’s government declared it was moving ahead with an in-depth investigation into the merger “on national security and competition grounds.”
Digital Secretary Nadine Dorries has ordered the UK’s Competition and Markets Authority (CMA) to carry out “an in-depth Phase Two investigation” into the proposed acquisition.
“Arm has a unique place in the global technology supply chain and we must make sure the implications of this transaction are fully considered,” Dorries says. “The CMA will now report to me on competition and national security grounds and provide advice on the next steps.”
That doesn’t bode well for Nvidia. In August, the CMA said it was worried the merger could reduce competition in the technology sector and stifle innovation in a number of markets, including data centers, gaming, IoT, and self-driving cars.
The main issue is that Arm licenses its chip designs to companies—Apple, Qualcomm, Samsung—to help them produce smartphones, laptops, and smart home devices. If Nvidia controls Arm, then it could potentially influence and undermine competitors across the industry.
"While not all individual devices relying on Arm-based chips are necessarily classed as ‘critical’ in themselves, the security and resilience of the broader supply chain is important for UK national security," the UK government notes.
The CMA now has 24 weeks to conduct the probe and deliver a final report to Dorries, who will then decide whether to block the deal or take other regulatory actions to remedy its effects.
However, Nvidia has argued that the proposed merger will be good for the industry because it plans on funding Arm to help it churn out more technologies. In addition, Nvidia has committed to maintaining Arm’s open-licensing model.
“We look forward to the opportunity to address the CMA’s initial views and resolve any concerns the government may have. We remain confident that this transaction will be beneficial to Arm, its licensees, competition, and the UK,” Nvidia said in August.
The regulatory scrutiny comes as the European Union is also probing the Nvidia-Arm deal over competition concerns. The European Commission has given itself until March 15 to make a decision on the matter.