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Government intervenes in $40bn acquisition of Cambridge-based Arm by NVIDIA on national security grounds





The government has intervened in the $40bn acquisition of Cambridge-based Arm by the US company NVIDIA due to national security concerns.

Digital secretary Oliver Dowden has asked the Competition and Markets Authority to investigate and report by midnight on July 30.

Jensen Huang, CEO and founder of NVIDIA. Picture: NVIDIA (44354214)
Jensen Huang, CEO and founder of NVIDIA. Picture: NVIDIA (44354214)

He issued a public interest intervention notice (PIIN) today (April 19), confirming he wa intervening in the sale on national security grounds, after considering advice from the “investment security community”.

The Secretary of State for Digital, Culture, Media and Sport has quasi-judicial powers under the Enterprise Act 2002 to intervene in mergers on public interest grounds.

The CMA is now expected to prepare a report on both the competition and national security aspects of the proposed transaction.

The authority was already investigating the acquisition. It announced on January 6 that it was inviting comments until January 27 on the proposed deal’s impact on competition and said it would determine whether it could lead to more expensive or lower quality products, or a withdrawal of services for NVIDIA’s rivals.

Arm’s HQ on Fulbourn Road, Cambridge. Picture: Keith Heppell
Arm’s HQ on Fulbourn Road, Cambridge. Picture: Keith Heppell

Critics of the proposed deal, including Cambridge entrepreneur and Arm co-founder Hermann Hauser, had warned the deal could have an impact on Arm’s famous open-licence business model, affect jobs in Cambridge and would represent another loss of technology sovereignty to the US.

The news will come as a blow to NVIDIA, which hoped that its commitments to keep the chip design giant in Cambridge, to invest in the site and to maintain its business model, would have helped convince authorities to allow the deal to progress.

Under the deal, NVIDIA is due to pay Arm’s current owner, the Japanese conglomerate SoftBank, $12bn in cash and $21.5bn in NVIDIA shares. SoftBank may also receive up to $5bn subject to certain financial performance targets being met by Arm. NVIDIA would also issue $1.5bn in equity to Arm employees.

Arm’s technology can be found in most of the world’s smartphones. It is able to licence its designs to any company.

A spokesperson for NVIDIA told the Cambridge Independent today: “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.”

NVIDIA has plans to make Arm the world’s leading artificial intelligence company, build a supercomputer to aid life science research and establish an AI research centre in Cambridge.

NVIDIA’s US HQ
NVIDIA’s US HQ

CEO Jensen Huang told the Cambridge Independent: “My vision is of investing in Arm as we create the world’s premier company for the age of AI, and of building a long-term partnership with Cambridge. Your city will become our European home, where I look forward to spending significant time.

“Arm will remain, as it is today, based in Cambridge, its intellectual property registered in the UK, employing some of the world’s greatest minds. We will establish a world-class AI research and education centre here in Cambridge, and build an AI supercomputer to fuel ground-breaking research.

“We will keep sacred Arm’s open licensing model, and use it to bring more innovations to more people, more quickly. We will invest in Arm’s partnerships with its customers and its network of outstanding developers.”

NVIDIA Cambridge-1 supercomputer
NVIDIA Cambridge-1 supercomputer

Daniel Zeichner, the MP for Cambridge, said: “Over six months after I, and leaders in the Cambridge tech sector, were telling ministers that Arm is a strategic national asset, they seem to have finally cottoned on.

“Semiconductors underpin the UK’s critical national infrastructure. So why on earth would we pass the last great British semiconductor company with global dominance in smartphones to a US tech company?

“The impact of this sale has always been about high tech jobs and how Arm is part of the unique tech ecosystem here in the city, but it has also always had wider implications. This is about tech neutrality and tech sovereignty.

“The government must block the sale if it is against Cambridge’s and the national interest.”

Jensen Huang, right, at the Arm DevSummit
Jensen Huang, right, at the Arm DevSummit

The government statement in full

Whereas the Secretary of State has reasonable grounds for suspecting that, as a result of the proposed acquisition by the NVIDIA Corporation (a corporation incorporated under the laws of Delaware with commission file number 0-23985) of all of the allotted and issued ordinary shares of ARM Ltd (a company incorporated and registered in England and Wales with the company number 02557590), it is the case that arrangements are in progress which, if carried into effect, will result in the creation of a relevant merger situation as defined in section 23 of the Enterprise Act 2002 (“the Act”), in that:

(a) two or more enterprises will cease to be distinct;

(b) in the course of the enterprises ceasing to be distinct, a person or group of persons will bring a relevant enterprise (as defined in section 23A of the Act) under their ownership or control; and

(c) the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £1 million.

Whereas no reference of the merger has been made under section 33 of the Act, nor has any decision been made not to make such a reference, nor is any reference prevented from being made by virtue of section 33(3)(za) or (a) of the Act.

Whereas the Secretary of State believes that it is or may be the case that a public interest consideration is relevant to a consideration of the relevant merger situation.

Now, therefore, the Secretary of State in exercise of his powers under section 42(2) of the Act hereby gives this intervention notice.

The Secretary of State believes that it is or may be the case that the interests of national security, being a public interest consideration specified in section 58(1) of the Act, are relevant to a consideration of the relevant merger situation.

Under and in accordance with section 44 of the Act, the Competition and Markets Authority is required to investigate and report by midnight at the end of 30 July 2021.

Director of International

Read more

NVIDIA CEO Jensen Huang’s message to Cambridge about his plans for Arm

‘NVIDIA’s Cambridge-1 supercomputer will be a force for life sciences’

Hermann Hauser calls on Prime Minister to intervene in $40bn Arm sale to NVIDIA

Arm sale to NVIDIA: Cambridge MP Daniel Zeichner says government is asleep at the wheel



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