LONDON — Nvidia’s $40 billion bid to buy U.K.-based chip designer Arm from Japan’s SoftBank has started to look increasingly uncertain.

The deal, one of the biggest semiconductor takeovers ever, was announced in September to much fanfare, although competition regulators around the world soon announced plans to investigate the acquisition. Probes were launched in the U.S., the U.K., China and Europe after companies like Qualcomm, Microsoft, Google and Huawei complained that the deal was bad for the semiconductor industry.

The U.K. investigation, being led by the Competition and Markets Authority, is also taking national security concerns into account. The CMA submitted its initial report to U.K. Culture Secretary Oliver Dowden on July 20, and he will take the decision on national security.

The report contains worrying implications for national security, and the U.K. is currently inclined to reject the takeover, according to a report from Bloomberg on Tuesday, citing an unnamed source familiar with the matter. A separate unnamed source said the U.K. was likely to conduct a deeper review into the merger as a result of national security concerns, Bloomberg reported. CNBC was unable to independently verify the report.

It’s unclear how U.K. national security would be affected if Arm goes from being Japanese-owned to U.S.- owned, but governments have come to view semiconductor technology as a vital asset amid the global chip shortage. 

An Nvidia spokesperson told CNBC: “We continue to work through the regulatory process with the U.K. government. We look forward to their questions and expect to resolve any issues they may have.” Arm and the U.K. government did not respond to CNBC’s request for comment.

The deal, which was initially expected to close by March 2022, also risks being held up elsewhere. In June, Chinese antitrust lawyers reportedly told The Financial Times that China’s investigation could take the deal beyond the 18-month window given by Nvidia in September 2020.

European regulators are thought to be reluctant to consider the case until after the summer holidays, according to a Reuters report published in June that cites people familiar with the matter, who say this could make it difficult for Nvidia to close the deal by March.

The purchase agreement gives the two companies the option to extend the deadline to September 2022. But, at that point, either company can walk away if the deal does not receive government approval.

Cambridge-based Arm sells its semiconductor blueprints and licenses to chip manufacturers around the world; it is viewed as a “neutral player” and is sometimes referred to as the “Switzerland of the chip industry.”

Some of these manufacturers, which compete with Nvidia, are concerned that the Santa Clara, California-based chip giant could make it harder for them to access Arm’s technology.

Nvidia has repeatedly insisted that it won’t change Arm’s business model and that it will invest heavily in the company to help it meet increasing demand.

Nvidia’s share price does not seem to have been affected following the Bloomberg report. It closed at $198.15 on Tuesday, up almost 1% for the day.

Elsewhere, another semiconductor acquisition is also being scrutinized. U.K. Prime Minister Boris Johnson has ordered national security adviser Stephen Lovegrove to review the takeover of Newport Wafer Fab, the U.K.’s largest semiconductor wafer manufacturing facility. The company is being acquired by Chinese-owned Nexperia for £63 million ($88 million).

Correction: An earlier version had the wrong last name for Stephen Lovegrove.