Nvidia's planned takeover of semiconductor maker Arm hit a roadblock this week as the UK government raised objections to the buyout due to national security concerns. Japanese tech company SoftBank had originally agreed to sell Arm, which is headquartered in Cambridge, as part of a $40 billion deal.       

Oliver Dowden, UK digital secretary, announced that the Competition and Markets Authority (CMA), the UK's competitive watchdog, would look into the sale and review any potential national security implications. The Authority will investigate if Arm plans to raise prices or otherwise hurt licensing services to Nvidia rivals. They will make a report by July 30 revealing their findings.

"Following careful consideration of the proposed takeover of ARM, I have today issued an intervention notice on national security grounds," said Dowden in a statement. "We want to support our thriving UK tech industry and welcome foreign investment, but it is appropriate that we properly consider the national security implications of a transaction like this."

The sale to Nvidia would represent the largest deal in the chip industry. Arm chips are used in phones, tablets, wearables and other consumer electronics devices globally. SoftBank originally purchased the company in 2016 for $32 billion to help grow its Internet of Things (IoT) division. The new deal will give SoftBank an ownership stake in Nvidia as well as an expected boost to its AI development and initiatives.

Arm has traditionally maintained a neutral position in the chipmaking industry, which could shift with the Nvidia buyout. Nvidia is a direct competitor of a number of Arm customers, including Qualcomm, Intel and Advanced Micro Devices.

The intervention notice issued this week will kick off a phase one investigation by UK authorities, designed to ensure all aspects of the deal have been examined. If concerns are raised, the deal could be blocked as part of a phase two investigation. If no concerns are found on public interest or competition grounds, the deal will be able to proceed.

The buyout is also being reviewed by the Federal Trade Commission in the U.S., which has opened an investigation and also requested information from third parties about the buyout.

"We do not believe that this transaction poses any material national security issues," said a spokesman for Nvidia in a statement. "We will continue to work closely with the British authorities, as we have done since the announcement of this deal."