The Government has intervened in the proposed takeover of UK computer chip design firm Arm by US tech giant Nvidia on national security grounds.

Culture Secretary Oliver Dowden confirmed he was stepping in, ordering the UK’s independent competition watchdog to begin a ‘phase one’ investigation of the deal, which is worth 40 billion dollars (£29.4 billion).

The Competition and Markets Authority (CMA) had already began inviting third parties to provide initial views on the anticipated sale and its impact on competition in the UK in January.

When the acquisition was first announced in September last year, Nvidia pledged to keep Arm’s headquarters in Cambridge while also promising to expand on Arm’s work to build a “world-class” technology centre.

Oliver Dowden
Culture Secretary Oliver Dowden said it is “appropriate that we properly consider the national security implications of a transaction like this” (Kirsty O’Connor/PA)

“Following careful consideration of the proposed takeover of Arm, I have today issued an intervention notice on national security grounds,” Mr Dowden said.

“As a next step and to help me gather the relevant information, the UK’s independent competition authority will now prepare a report on the implications of the transaction, which will help inform any further decisions.

“We want to support our thriving UK tech industry and welcome foreign investment, but it is appropriate that we properly consider the national security implications of a transaction like this.”

The CMA will advise whether the takeover could lead to a substantial lessening of competition in any market in the UK, and whether it should be put through further scrutiny in a ‘phase two’ investigation.

It will have until July 30 to complete the report and submit it to the Culture Secretary.

A spokesperson for Nvidia said: “We do not believe that this transaction poses any material national security issues.

“We will continue to work closely with the British authorities, as we have done since the announcement of this deal.”