Why it matters: Is Nvidia's $40 billion acquisition of Arm on shaky ground? It looks that way after the UK Secretary of State for Digital, Culture, Media and Sport issued a public interest intervention notice. The uncertainty has seen team green's pre-market share price fall up to 3.1% as investors get nervous.

Nvidia's acquisition of Arm has been a controversial subject since it was revealed back in September. Qualcomm, Google, and Microsoft are just some tech giants concerned about what it would mean for Arm's open-licensing model and customer neutrality. Even its co-founder, Hermann Hauser, believes the sale would be a disaster.

The acquisition was always going to come under the scrutiny of regulators. In January, the UK's Competition and Markets Authority (CMA) requested interested third parties submit their views on the deal before a formal investigation is launched later this year.

Largest tech deals in history:

Company Acquisition Price Year
Dell EMC $64 billion 2015
Avago Technologies Broadcom $37 billion 2015
IBM Red Hat $34 billion 2018
Softbank ARM Holdings $31.4 billion 2016
Microsoft LinkedIn $26.2 billion 2016

Now, the UK's Secretary of State for Digital, Culture, Media and Sport has announced he is intervening in the sale on national security grounds. The CMA has until July 31 to "prepare a report on the competition and national security aspects of the proposed transaction" and submit it to the Secretary of State, who will then decide whether to allow it.

Nvidia's share slump comes a week after the price hit a record high following the GTC conference, where the company announced better-than-expected revenue and new Arm-based data center CPUs called Grace and Grace Next.

Nvidia will pay $12 billion in cash and $21.5 billion in shares to Softbank, which paid $31 billion for Arm in 2016. SoftBank may receive up to an extra $5 billion based on financial performance targets by Arm, and Nvidia will issue $1.5 billion in equity to Arm employees.

Nvidia has many reasons to hope the deal goes through, not least the $1.25 billion it must pay Softbank in the event the acquisition fails to close.