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The planned £29bn purchase of UK chip designer Arm by US firm Nvidia raises "serious" competition concerns, the UK's competition watchdog has said.

The Competition and Markets Authority said it was worried the deal would stifle innovation in several areas, such as gaming and self-driving cars.

As a result, the CMA says a more in-depth investigation into the takeover is warranted.

Nvidia said the deal would benefit Arm, licensees and competition in the UK.

"We look forward to the opportunity to address the CMA's initial views and resolve any concerns the government may have," a spokesperson for the US tech company said.

Japan's Softbank, which currently owns Cambridge-based Arm, agreed to sell it to Nvidia in September last year.

Arm's intellectual property (IP) is used by some of Nvidia's rivals to produce semiconductor chips and the CMA suggested that if Nvidia controlled Arm it could cut off access to that IP for its rivals.

Nvidia, the world's largest graphic and AI chip maker, had offered up remedies to get the deal approved by the UK regulators, but the CMA said these would not be enough to allay its concerns.

The takeover will now likely be subject to a deeper "phase 2" investigation, which increases the likelihood that it will be stopped altogether.

A spokesperson for the Department for Digital, Culture, Media & Sport (DCMS) said: "The Digital Secretary will make a decision on whether to proceed to the next phase of the investigation in due course."