The U.K. government announced Tuesday that it wants a full-blown investigation into Nvidia’s (NASDAQ:NVDA) takeover of Cambridge chip designer Arm, which is widely seen as the jewel in the crown of the British tech sector.
Digital and Culture Secretary Nadine Dorries ordered a "phase 2" probe into Nvidia’s $40 billion bid for Arm. The probe — to be carried out by the Competition and Markets Authority over the next 24 weeks — will investigate antitrust concerns and national security issues associated with the deal. The CMA said it had serious concerns about the deal after it completed the initial "phase 1" probe.
The takeover is being scrutinized by regulators around the world and the chip companies said in August that the deal is now unlikely to be completed before the initial deadline of March 2022.
An Nvidia spokesperson told the media on Tuesday: "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 U.K. government to resolve its concerns."
The company licenses its chip designs to more than 500 companies who use them to make their own chips.
Critics are concerned that the merger could restrict access to Arm’s “neutral” chip designs and that it could lead to higher prices, less choice and reduced innovation in the semiconductor industry. But Nvidia argues that the deal will lead to more innovation and that Arm will benefit from increased investment.
NVDA shares still gained 72 cents to $300.97.
