On October 21, Chinas technology companies, including Huawei, have expressed concerns to Chinese regulators about NVIDIAs acquisition of arm, which could lead to the collapse of the $40 billion (270 billion yuan) deal, according to a person familiar with the matter.
Chinese companies such as Huawei seek to restrict NVIDIAs acquisition of arm
Several of Chinas most influential technology companies have been communicating with Chinas State Administration of market supervision, hoping that the authorities will either veto the deal or add additional conditions to ensure that they can continue to use arms technology, the report quoted anonymous people familiar with the matter.
What these companies are most worried about is that NVIDIA may force arm to stop cooperating with Chinese companies.
In fact, although arm is headquartered in Cambridge, UK, it was acquired by Softbank group of Japan as early as 2016. The company does not have a chip factory. It mainly authorizes users in the industry with its core architecture IP, and its income mainly relies on one-time license fee and royalty Commission.
At present, the chip architecture designed by arm is widely used in well-known enterprises such as apple, Samsung, Huawei, NVIDIA and Qualcomm, so that 90% of the worlds smart phone processors and other types of mobile chips adopt the architecture scheme designed by arm.
At the same time, NVIDIA is the inventor and leading manufacturer of GPU. In recent years, with the rise of big data and AI, with the foundation laid in the GPU field, the company has rapidly deployed its strength in the core technology industries such as AI, data center and cloud computing.
With the continuous improvement of its position in the industry, NVIDIA surpassed Intel in July this year and became the largest semiconductor manufacturer with the highest market value in the United States. At present, its market value has exceeded 100 billion US dollars, ranking second only to TSMC and Samsung among global semiconductor enterprises.
Comparison of NVIDIA (white line) and Intel stock price trend
Therefore, in the view of industry insiders, if NVIDIA successfully acquires arm, it will not only become one of the largest acquisitions in the history of semiconductor industry, but also give birth to a Big Mac in the chip industry.
Theres no reason for China to let this deal go smoothly, said an industry analyst. If NVIDIA is allowed to acquire arm, it may make it harder for Huawei to acquire the chip architecture designed by the British company. The design of arm is the basis of many Huawei products, including Kirin mobile phone chip, Kunpeng server chip and shengteng chip for artificial intelligence applications
Neither Huawei nor Chinese regulators responded to a request for comment from the company.
NVIDIA is confident about the deal.
Once we explain the reasons for the deal and our plans, regulators around the world will realize that they are two complementary companies. When the two companies merge, there will be new innovations, which are good for the market. Huang Renxun, CEO of NVIDIA, said.
But Chinese industry doesnt think so.
Industry insiders pointed out that, on the one hand, after the acquisition of arm, NVIDIA may use its market monopoly to suppress competitors, making competitors unable to obtain authorization or fair authorization; on the other hand, after acquisition, arm will be subject to the regulations of the Cfius, and its products must be exported to major global markets including China U.S. regulations must be followed.
Ni Guangnan, academician of the Chinese Academy of engineering, also believes that if NVIDIAs M & A is successful, it will definitely be very unfavorable for Chinese enterprises.
Therefore, I believe that the Ministry of Commerce may decide whether this merger and acquisition can be achieved or not, I dont know. In a word, we cant use arm very comfortably in the future. He said.
According to Chinas anti monopoly law and relevant provisions, if the global turnover of the two companies exceeds 10 billion yuan, regardless of whether Chinese enterprises are involved, they should be included in Chinas anti-monopoly supervision. Both arm and NVIDIA meet this condition, and China is the largest market for arm. Therefore, the merger and acquisition case undoubtedly needs to be approved by the Chinese side.
Huang Renxun, founder of NVIDIA
It was also pointed out that NVIDIAs clearance in China may be the biggest challenge and it is difficult to predict whether the deal will be approved in China.
It is worth mentioning that as early as October 2016, Qualcomm intended to spend US $38 billion to acquire NXP, a Dutch semiconductor company. However, after 20 months of negotiation, only the Chinese market regulatory authorities did not approve the acquisition, and the acquisition finally failed.
But according to the news agency, China can put forward licensing conditions, which in turn can obtain favorable terms for Chinese enterprises.
As a matter of fact, not only China, but also the British culture minister said recently that although the acquisition is mainly commercial issues of all parties concerned, the British government will pay close attention to these issues and will not hesitate to further investigate and take appropriate action when the acquisition may have a significant impact.
Prior to this, several Silicon Valley technology giants have stood up to oppose the deal, including Intel, Qualcomm, Tesla and other manufacturers are discussing coordinated action to express their concerns to the U.S. and other governments around the world.
Herman Hauser, the co-founder of arm, was clearly opposed to the deal as early as the rumors of the acquisition came out. He believes that the sale of arm to NVIDIA would be an industry disaster, and the deal will not be approved in the end.
Source: observer.com editor in charge: Qiao JunJing_ NBJ11279