The UK Government’s “inclined to reject” Nvidia’s ARM takeover on security grounds

Nvidia’s acquisition of ARM is taking longer than expected, with the deal facing higher than expected levels of scrutiny within China and the EU. While the deal was originally due to be completed before March 2022, that end date is starting to look increasingly optimistic, especially now that the deal is facing complications inside the UK. 

Earlier this year, the UK government asked the Competition and Markets Authority (CMA) to prepare a report on the “competition and national security” aspects of Nvidia’s $40 billion ARM acquisition. This report has now been delivered to the UK’s Digital Secretary of State, Oliver Dowden, and it is making waves.

According to sources at Bloomberg, the report details worrying national security implications of the Nvidia ARM acquisition, details that make the government “inclined to reject the takeover”. The report is likely to force the British government to look into the merger more deeply. 

This news does not mean that the UK will stop Nvidia from acquiring ARM. The UK has the option to make their approval of the deal conditional, forcing Nvidia to comply with the UK’s needs to complete their ARM acquisition. That said, Nvidia will also need to please Chinese and EU regulators before their acquisition of ARM can be finalised. 

Should regulators prevent Nvidia from acquiring ARM, Nvidia’s pathway towards computational domination will be halted. That said, Nvidia’s ARM-based CPU plans do not require Nvidia to own ARM, and other aspects of Nvidia’s plans with ARM could be completed as an ARM licensee. ARM is reportedly considering an IPO should Nvidia’s acquisition plans fail.