Analysts believe that a stumbling block in NVIDIA’s attempt to buy ARM from SoftBank for $40 billion, could be Chinese regulators. It will be the largest in the chip industry when the deal is complete.
However, with regulators China’s Ministry of Commerce (MOFCOM) and China’s State Administration for Market Regulation (SAMR) still having to weigh in, the deal is still far from complete. “Technically, Beijing can block the deal,” Abishur Prakash, a geopolitical specialist at the Center for Innovating the Future, based in Toronto, said to CNBC.
Bill Ray, a senior director analyst at research firm Gartner, also told CNBC that Chinese regulators “will seek to extract specific guarantees before granting approval”. He also said, “some of these guarantees may be beyond the ability of NVIDIA to provide”. Ray specifically refers to the ongoing provision of Arm’s intellectual property (IP) to Chinese businesses.
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Chinese regulators have previously prevented a US chip firm from buying a European counterpart. SAMR blocked Qualcomm’s attempt to take over Dutch chipmaker NXP in 2018. However, the parties involved seem to be confident of getting the necessary approvals. An Arm spokesperson told CNBC that: “Nvidia, Arm, and SoftBank are confident that all regulatory approvals will be secured”.
ARM has a joint venture with a Chinese private equity firm, Hopu Investments called ‘Arm China’. Arm China has its headquarters in Shanghai, and this means China’s regulators have the right to review the Nvidia deal.
The Chinese chip industry is worried that the deal will give the US control over a key technology. One big reason is the US’s frail relationship with Huawei. They believe that control by a US company could create panic. “The possibility that Arm could be politicized as a US technology weapon against China’s technology companies must be taken seriously,” an editorial in a Chinese newspaper, Global Times warned.
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