Eight months ago the acquisition of United Kingdom based chip designer Arm by the United States based Nvidia worth a $40bn deal was announced while the US firm has now submitted an application to Chinese competition regulators for reviewing of the deal, said a report from the Financial Times quoting sources withy knowledge of the matter.
According to Chinese antitrust lawyers, the review of the deal by the Chinese authorities could take as long as between a year and 18 months, and the process started with the application. But that would be more than the 18-month timeline that was set out by Nvidia at the time of the announcement of the deal in September last year.
In China, Arm licenses its energy-efficient chip designs through a local joint venture which makes the Chinese market a huge one for the British company. In 2019 the sale revenues of Nvidia in China was about $500m according to reports quoting sources familiar with the joint venture. This is the reason that the deal has to be approved by the Chinese regulators.
The US chip company had “started the process” of engaging with Chinese regulators, Jensen Huang, Nvidia’s chief executive, had said in an interview with the Financial Times last month. He said he was confident the deal would be cleared within the timeframe set by Nvidia.
He cited the acquisition of Israeli company Mellanox by Nvidia which was first formally announced in 2019 and the Chinese approval was the last stage in a 13 month process of sealing the deal. “China usually comes after all the other regulators . . . This is consistent with the last experience I had,” he had said.
Nvidia added that the “regulatory process is confidential and we are not able to comment on its progress”.
The deal is however opposed by local Chinese chipmakers, such as Huawei’s HiSilicon and Semiconductor Manufacturing International Corporation, as well as state-backed chip investment group E-Town Capital, said the report quoting sources familiar with the thinking of China’s antitrust regulators.
The reasons behind the opposition stems from fears among the Chinese chip makers that the US-based Nvidia will have greater control of the designs that underpinned a large portion of chip industry of China and the Chinese chip making companies.
But Huang said a union between Arm and Nvidia would “only bring more innovation to the marketplace”. He had reiterated confidence of closure of the deal.
Arm is fighting a long-running battle for control of its China business, after it and its partners failed to oust the head of its joint venture, Allen Wu.
(Adapted from FT.com)