The UK’s competition watchdog is to investigate the proposed acquisition of UK computer chip design firm Arm by US tech giant Nvidia.

The proposed deal, worth 40 billion dollars (£29.4 billion), was first announced in September last year.

Now the Competition and Markets Authority (CMA) has confirmed it is inviting third parties to provide initial views on the anticipated sale and its impact on competition in the UK.

The chip technology industry is worth billions and critical to many of the products that we use most in our everyday lives

Arm is best known as the designer of processor chips used in most major smartphones – including Apple and Samsung – as well as other devices such as laptops.

The CMA said it would look at the possible effect on the chip market in the UK and will consider whether, following the takeover, Arm would have an incentive to withdraw, raise prices or reduce the quality of its intellectual property licensing services to Nvidia’s rivals.

CMA chief executive Andrea Coscelli said: “The chip technology industry is worth billions and critical to many of the products that we use most in our everyday lives.

“We will work closely with other competition authorities around the world to carefully consider the impact of the deal and ensure that it doesn’t ultimately result in consumers facing more expensive or lower quality products.”

When the deal was first announced last year, the Government said it would examine the sale in order to understand its impact on the UK and the economy.

At the time, Nvidia pledged to keep Arm’s headquarters in Cambridge while also promising to expand on Arm’s work to build a “world-class” technology centre.