UK orders a six-month probe into Nvidia's $40 billion bid to buy Arm

Nvidia's $40 billion bid for U.K. chip design developer Arm received another blow early Tuesday as the country's Digital Secretary Nadine Dorries ordered the country's Competition and Markets Authority to conduct a six-month investigation of the deal over issues surrounding competition and national security.

"Arm has a unique place in the global technology supply chain and we must make sure the implications of this transaction are fully considered," Dorries said in a statement. "The CMA will now report to me on competition and national security grounds and provide advice on the next steps."

Once the digital secretary receives the report from the CMA's investigation, Dorries could rule that the deal runs afoul of public interest, and could force changes and concessions to the deal in order to eliminate the perceived consequences. Dorries could also find no reason to challenge the acquisition and punt it back to the CMA.

The investigation is subject to a possible two-month extension beyond the six months it is now set to run.

An Nvidia spokesperson said the lengthy investigation will give the company a chance to demonstrate the benefits of the transaction, and it plans to continue to work with the U.K. government to resolve its concerns.

The CMA had conducted a probe of the deal and in August expressed serious concerns about the bid to buy Arm. At the time, the regulator said the transaction could create problems for Nvidia's customers if Nvidia decides to limit access to key Arm designs. The CMA had recommended an in-depth probe to the Digital Secretary's office.

The CMA published the full report from the first phase of its investigation Tuesday.

One of the selling points of the chip designs Arm sells is its independence, having the reputation of licensing the technology to any company that is willing to pay the fee. Transferring control of Arm's designs to Nvidia has triggered some industry support, but also a wave of industry opposition that includes Alphabet and Microsoft.

The European Union opened an in-depth investigation this month.

Japan-based SoftBank took Arm private in 2016 for $32 billion. If the Nvidia deal doesn't close by September 2022, SoftBank will receive a $1.3 billion breakup fee. Nvidia executives warned earlier this year that the deal would be delayed but have not yet issued a fresh estimate.