The U.K. is considering blocking a takeover of Arm Ltd. by Nvidia Corp. due to potential risks to national security, according to people familiar with the discussions.

The chip industry became a central part of former President Donald Trump’s trade war with China and the U.S. has taken action to restrict that country’s access to know-how that’s primarily owned by the U.S. companies that dominate the industry. U.S. government restrictions on the sale of chip technology to China already govern some of Arm’s inventions, as the company has operations there.

Newport Wafer Fab Ltd., based in Wales, is currently under review from the U.K. government after it agreed to be sold to a Chinese manufacturer for around 63 million pounds ($87 million).

Critical AssetsNewport Wafer Fab Ltd., based in Wales, is currently under review from the U.K. government after it agreed to be sold to a Chinese manufacturer for around 63 million pounds ($87 million).

In April, U.K. Culture Secretary Oliver Dowden asked the Competition and Markets Authority (CMA) to prepare a report on whether the deal could be deemed anti-competitive, along with a summary of any national security concerns raised by third parties.

The assessment, delivered in late July, contains worrying implications for national security and the U.K. is currently inclined to reject the takeover, a person familiar with government discussions said. The U.K. is likely to conduct a deeper review into the merger due to national security issues, a separate person said.

No final decision has been taken, and the U.K. could still approve the deal alongside certain conditions, the people added. Dowden is set to decide on whether the merger needs further examination by the U.K.’s competition authorities.

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

Shares in Nvidia were little changed on Tuesday, while SoftBank fell 1.5% in Tokyo on Wednesday.

“If regulators do block the deal, it will impede Nvidia’s ability to dominate the computing-chip market, but we believe investors already had low expectations that the deal would be completed.”

By: DocMemory
Copyright © 2023 CST, Inc. All Rights Reserved