The UK is considering blocking the planned takeover of Arm by Nvidia on national security grounds, according to sources reported by Bloomberg.

The news comes after months of controversy surrounding the deal; the Competition and Markets Authority (CMA) officially opened an investigation in April into the planned $40 billion acquisition of the Cambridge-based company, which reported back on July 20.

The report took a dim view of the deal on national security grounds according to Bloomberg sources, and the UK is now likely to reject the deal.

Arm, which has 6,500 employees worldwide, designs processors which are widely used in consumer electronic devices such as smartphone tablets, but also some desktops and super computers.

The final decision has yet to be made regarding the takeover and the deal could still be approved according to Bloomberg’s sources.

Shares in Nvidia dropped by 2.7 per cent in Tuesday trading following the news.
If the deal is approved, Arm will keep its current name and its Cambridge base will be expanded according to Nvidia chief executive Jensen Huang.

Nvidia’s acquisition is not the only controversial demonstration of foreign interest in the UK chip industry; Newport Wafer Fab, the UK’s largest chip producer, was bought by Chinese owned company Nexperia in July.

“We continue to work through the regulatory process with the UK government,” said a Nvidia spokesperson. “We look forward to their questions and expect to resolve any issues they may have.”

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