The multibillion-pound purchase of UK computer chip designer Arm by US tech giant Nvidia might stifle innovation, the competition watchdog has said.

The Competition and Markets Authority (CMA) said it was concerned the 40 billion dollar (£31.2 billion) deal might restrict the access Nvidia’s rivals have to Arm’s technology, which is used by firms to making semiconductor chips and other products.

The CMA said this raised serious competition concerns across a number of markets, including data centres, gaming and self-driving cars, and as a result, an in-depth investigation into the deal was warranted.

Andrea Coscelli, chief executive of the CMA, said: “We’re concerned that Nvidia controlling Arm could create real problems for Nvidia’s rivals by limiting their access to key technologies, and ultimately stifling innovation across a number of important and growing markets.

“This could end up with consumers missing out on new products or prices going up.

“The chip technology industry is worth billions and is vital to products that businesses and consumers rely on every day.

“This includes the critical data processing and datacentre technology that supports digital businesses across the economy, and the future development of artificial intelligence technologies that will be important to growth industries like robotics and self-driving cars.”

Nvidia offered a measure to regulate the ongoing behaviour of the business, but the competition watchdog said such this would not alleviate its concerns.

The CMA said it has reported those concerns to the Department for Digital, Culture, Media and Sport (DCMS), where a decision on next steps will be made.

In response, a DCMS spokesperson said: “We have received the CMA’s phase one report and the Digital Secretary will make a decision on whether to proceed to the next phase of the investigation in due course.”

The Government has also been separately been considering the national security implications of the deal, and the CMA confirmed it had also provided ministers with a summary of representations from third parties on that issue.

An Nvidia spokesperson said: “We look forward to the opportunity to address the CMA’s initial views and resolve any concerns the Government may have. We remain confident that this transaction will be beneficial to Arm, its licensees, competition, and the UK.