Digital secretary Nadine Dorries said: “ARM has a unique place in the global technology supply chain and we must make sure the implications of this transaction are fully considered.
“The [Competition & Markets Authority] will now report to me on competition and national security grounds and provide advice on the next steps.”
The US$40bn deal is already under scrutiny on competition grounds in a host of other countries including the US, China and the European Union.
Cambridge-based chip designer ARM is one of the jewels in the UK technology crown, with its IP licensed to hundreds of manufacturers to power mobile phones, laptops, tablets and increasingly artificial intelligence applications, where US group Nvidia is keen to grow.
ARM is currently owned by Japanese investment company Softbank, which bought the company for US$32bn in 2016 before agreeing to sell to Nvidia for shares now worth US$54bn to Softbank over a year ago.
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.”
Herman Hauser, one of ARM’s co-founders, has consistently called for the deal to be blocked saying it would create the next tech monopoly alongside Google, Facebook and Amazon and be a disaster for the UK, Europe and the tech industry
The phase 2 inquiry will delay any deal for at least six months with a final recommendation to be made to the UK government on whether it should go ahead at its conclusion.
Nvidia 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 UK government to resolve its concerns.”