The UK government is considering blocking chip designer Nvidia’s $40 billion acquisition of British rival Arm on potential national security risks, Bloomberg News reported.
Nvidia said that it is working through the regulatory process with the UK government.

“We look forward to their questions and expect to resolve any issues they may have,” an Nvidia spokesperson told Reuters.

Arm, currently owned by Japan’s SoftBank Group is a major player in semiconductors, a sector fundamental to technologies from artificial intelligence and quantum computing to 5G telecoms networks. Its designs power nearly every smartphone and millions of other devices.

UK’s Competition and Markets Authority (CMA) had sent its completed Phase 1 investigation report to the UK government on July 20, according to the government’s website.

The assessment submitted contains worrying implications for UK’s national security, the Bloomberg report said.

The U.K. government is likely to conduct a deeper review of the merger due to national security issues, the report said.

In April, the UK government said it is invoking national security to investigate the deal and that CMA will assess the competition, jurisdiction and national security impact of the deal.

The CMA in January said it will look at the deal’s possible effect on competition in the UK. The CMA is likely to consider whether, following the takeover, Arm has an incentive to withdraw, raise prices or reduce the quality of its IP licensing services to NVIDIA’s rivals.