The UK may prevent NVIDIA from buying Arm Holdings, over national security concerns.

Arm is one of the UK’s biggest tech success stories. Arm creates chip designs which it then licenses to other companies for use in their products. Apple, Qualcomm, Samsung and others use the company’s designs. In Apple’s case, its license is so broad that it can customize the designs, creating truly custom silicon.

NVIDIA made headlines in September 2020 when it announced it had reached a deal to acquire Arm. Almost immediately the deal was met with scrutiny and condemnation by many in the industry. Arm had a reputation of being neutral, selling its designs to any company wanting to license them. Many critics feared NVIDIA would reserve Arm’s greatest inventions for itself, giving it a major advantage over competitors.

And even bigger issue has come to the fore, and may ultimately sink the deal: national security. As the COVID-19 pandemic showed, relying on semiconductor makers around the world can be a critical flaw when global supply lines are impacted by a major event. In addition, some British lawmakers are concerned about the implications of having Arm under the control of a US company, one that would be at the mercy of the US surveillance apparatus.

All of these concerns are combining to potentially scuttle the deal, according to Bloomberg. UK Culture Secretary Oliver Dowden authorized a report on the deal to determine if it was anti-competitive, as well as what national security implications there might be.

Based on that report, Bloomberg’s sources say UK officials are currently leaning toward rejecting the deal, although nothing final has been decided.