UK Government Intervenes in NVIDIA Acquisition of ARM

Posted on April 19, 2021 by Paul Thurrott in Hardware, Mobile, Android with 17 Comments

The UK government said today that it was intervening in the proposed sale of ARM to chipmaker NVIDIA on national security grounds.

“Under the powers set out in the Enterprise Act 2002, the Secretary of State for Digital, Culture, Media and Sport is able to intervene on national security grounds,” the UK agency announced. “[Today,] the Secretary of State issued a public interest intervention notice (PIIN), confirming that he is intervening in the sale on national security grounds. In reaching this decision, he considered advice received from officials across the investment security community.”

NVIDIA announced last September that it would purchase ARM for $40 billion and pledged that it would continue licensing its critical mobile chipsets to licensees. The acquisition has since been contested by multiple parties for competitive reasons. But the UK action is interesting in that it specifically mentions national security concerns.

The intervention could postpone the sale by at least several months. For now, the government is waiting on a report about the implications of the transaction from its competition authority, which is due by the end of July. At that point, the government will make further decisions with regard to the sale.

ARM was founded in Cambridge, England, and still maintains its headquarters there. So the sale of such a strategic company to a U.S.-based firm is understandably concerning, though I’m unclear on the national security bit.

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Comments (17)

17 responses to “UK Government Intervenes in NVIDIA Acquisition of ARM”

  1. maddycom

    It is better then something private equity fund buying ARM, UK looking for a local tech company to buy them which does not exist.

  2. wright_is

    We have seen, with Huawei and various other companies in China and elsewhere, where the US Government claims perogative and stops the sale of goods, licenses and services to third parties. At the moment, ARM is British and, while an US international embargo might stop them selling licenses to, say, Huawei, the US Government couldn't stop ARM selling licenses critical infrastructure or defence companies in the UK or the NATO pack. If ARM was part of nVidia, the US government could stop the sale of licenses to UK based defence contractors, for example.

    The US has done itself no favours, internationally, over the last 4 years. Other countries are now sceptical and this could be the start of doubling down on bringing back R&D, licensing and manufacturing technologies to local levels - not actually a bad thing.

    • peterc

      In reply to wright_is:

      Exactly. The experience of the Trump administration trying to stop ARM do business with Huawei caused significant problems for the UK Govt and has created a significant shift of direction for the UK Govt in terms of what "national security" now means for the UK and its trading partners.

      I suspect ARM and its IP will (eventually) remain majority British owned once all the scrutiny is concluded, its too important a company now for the UK and will be used, along with the other Industries and IP being financed, in its trade dealings and negotiations with the US, China, EU, Russia, India etc etc

  3. nbplopes

    Heheh. A political stunt, Boris style. No one believes of course that UK thinks that the US presents a National Security threat to Britain. So the conclusion ... some may need their hands well wheeled.

  4. glenn8878

    National Security concerns when bought out by a Japanese firm didn't seem to be a problem. Softbank later sold a 25% stake to a Saudi Arabia investment firm. The UK government is not saying what it is really concerned about.

    • wright_is

      In reply to glenn8878:

      Yes, but the US trade sanctions that badly affected the semi-conductor business and the sale of parts, plant and licenses to some Chinese companies suddenly made the world look up and take notice.

      If the US could revoke licenses to UK defence contractors, for example, that would certainly be a national security issue.

  5. dstrauss

    AKA - Qualcomm called the ministry and said "Block this abomination or we'll turn off all your Qualcomm modems..."

  6. ponsaelius

    There is another dimension - Brexit. Boris Johnson, the Prime Minister, has an image of a buccaneering, freewheeling, enterprise orientated Britain. The populist political image is to prove that leaving the European Union was the right way to go. The EU would have had no impact on this even if the UK had stayed. However, Johnson's political objective is to prove the UK is part of the new industrial revolution, a sort of "Silicon Valley on The Thames".

    Rather than viewing the decision from the perspective of rational thought, you need to look it through the flag waving nonsense of a populist Government wanting a headline about innovation, and a sprinkle of technology. Whatever the outcome the idea that a Cambridge based company is being sucked up by a North American tech firm doesn't play well without a bit of flag waving.

    • wright_is

      In reply to ponsaelius:

      And now that Trump's Mini-Me has been abandoned to his own devices, he is looking at the US with a sceptical eye.

      But the use of trade embargoes set up by the US in the last 4 years has shown just how much globalization can be damaged by a single decision. If ARM remains a UK based company, the US can't stop it selling licenses, especially to entities in the UK defence branch.

    • MarkPow

      In reply to ponsaelius:

      Following the Brexit vote, I’m sure SoftBank couldn’t believe their luck that an asset they were planning on buying suddenly became 20% cheaper overnight! The UK has lost some other fantastic assets since.

      I’m fairly certain that this government hasn’t a clue what National Security is - isn’t that Trident?

      Needless to say, I will never be reconciled to leaving the EU. I love being European. Sorry “loved”.

      • wright_is

        In reply to MarkPow:
        Needless to say, I will never be reconciled to leaving the EU. I love being European. Sorry “loved”.

        Same here, although I had the luck of having lived and worked in Europe for more than 10 years, so I am now British and German and have 2 passports - although my British passport is still red-brown.

  7. behindmyscreen

    yet Softbank wasn't a national security concern?

    • wright_is

      In reply to behindmyscreen:

      It is Japanese, not American. The US Government bought a job-lot of monkey-wrenches over the last 4 years and through them wholesale into the International Trade cogs. Having US influence in a business is no longer a good thing.

  8. spiper

    I would think the "national security" perspective is at least partly about preserving the UK industrial base. As we've seen here in the US having chip foundry capacity that is not dependent on imports or international logistics improves overall industrial capacity. Think cars sitting waiting on controller chips from Taiwan. This is part of Gelsinger's statement about Intel building US chip capacity. I have no idea if ARM actually has plants in the UK though.

    • wright_is

      In reply to spiper:

      Not just industrial capacity, but the capacity to carry on working in the event of US sanctions on specific technologies. If those technologies are local or "not US influenced", you can keep on using them - the same goes for any other country. The whole Huawei debacle has shown governments and companies around the world that they can't rely on US based partners or technologies and having enough capacity locally is very important.

      ARM "only" sells licenses, but if it went to nVidia and the US Government stopped licensing to UK defence contractors, that would be a huge problem for the UK, for example. Same if comms producers suddenly couldn't supply any more, because their ARM licenses had been revoked. If anybody has the ability to revoke or stop license sales, then the UK Government wants to be in the top position.

  9. melinau

    It'll be interesting to see where this ends up.

    Since Allegra Stratton took over Johnson's PR, No. 10 has done a good job of firing-off announcements & initiatives which should appeal both to the flag-waving rump of the Tory-Right, and some to the middle of the road "Liberal" types. By hoisting "National Security" up the flagpole they're blowing a strong dog-whistle to their base[sic] supporters. Blocking a US "Tech Giant" appeals to those concerned by Global Capitalism. Announcements & unfulfilled Initiatives cost nothing, Financially nor Politically after all. Cunning stunts eh Baldrick?

    Notwithstanding the Politics of all this, flogging ARM to NVIDIA is probably a Bad Idea for almost anyone who cares about our tech futures. Too much power & influence already resides in the hands of a very few giant conglomerates, dropping one of the few "independent" companies into the lap of another seems perverse, especially considering the knock-on to numerous other players.

    I rather expect that a few surreptitious Directorships & post-politics sinecures will sweeten the deal & it'll eventually go through. It's very relevant that the Brexit arm[sic] of Tory Party Plc desperately needs a big "Win" Trade Deal & USA would be just the ticket to take into the next General Election. Blocking NVIDIA (a powerful US company) from buying ARM might not help with achieving this...