Culture Secretary Nadine Dorries orders probe into Nvidia’s £31bn swoop on chipmaker Arm

Ministers have ordered a full-blown investigation into Nvidia’s £31billion swoop on chipmaker Arm in a move that could scupper the takeover.

After Nadine Dorries, Culture Secretary, intervened for national security and competition reasons, the controversial agreement will be subject to further delays.

Softbank agreed last September to purchase Cambridge-based Arm from US tech giants.

But the planned tie-up has triggered uproar from Arm’s customers and is already under scrutiny in China, the US and EU.

Probe: Nvidia's controversial swoop on chipmaker Arm will face more delays after Culture Secretary Nadine Dorries (pictured) intervened on competition and national security grounds

Probe: Nvidia’s controversial takeover of chipmaker Arm is likely to face additional delays, after Nadine Dorries, Culture Secretary (pictured), intervened for national security and competition reasons

Dorries believes it is crucial for the UK’s national security to maintain reliable access to Arm’s technology, the Government said in a letter yesterday, and that there are fears the Nvidia takeover could remove this.

Yesterday’s documents reveal that the National Cyber Security Centre also expressed concerns over the agreement.

Over the summer, UK regulator the Competition and Markets Authority (CMA) flagged concerns about what it could do to the wider semiconductor industry – saying it could stifle innovation, lead to less competition and drive up prices.

The timing is crucial as microchip shortages are causing shockwaves in the manufacturing industry and slowing down production.

The Phase Two investigation will be conducted by the CMA.

The deadline for completion is 24 weeks. However, it could extend this by eight additional weeks. It will have the ability to stop the takeover on competitive grounds. Dorries can also block it if there is a risk to the security of the company.

Dorries said: ‘The Government’s commitment to our thriving tech sector is unwavering and we welcome foreign investment, but it is right that we fully consider the implications of this transaction.’

Arm is seen as a jewel in the crown of the UK’s tech sector. It was spun out of a firm called Acorn Computers in 1990, and after years on the stock market was snapped up by Japan’s Softbank for £24billion in 2016.

Arm’s customers include Google, Samsung and Apple. Softbank licenses Arm’s designs to more than 500 companies which use them to make their own chips, which are used in 95pc of smartphones and in an array of other devices from cars to fridges that are connected to the internet.

More than 200bn chips have been made worldwide using its designs – and some 900 are produced per second.

Russ Shaw, founder of Tech London Advocates, said: ‘The UK was caught napping in 2016 when Arm was sold to Softbank – a sale which faced virtually no scrutiny and was a major failure of national security.’

A Nvidia spokesman said: ‘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 Government to resolve its concerns.

‘The Phase Two process will enable us to demonstrate that the transaction will help to accelerate Arm and boost competition and innovation, including in the UK.’