Chinese regulators might stop Nvidias latest acquisition
The 40bn Dollar takeover of chip producer Arm might not go ahead as planned.
The agreement for Nvidia Corp (Nasdaq: NVDA) to acquire UK-based chipmaker Arm from Softbank for $ 40 billion could be a significant step for the industry that will affect several players in the electronics industry, particularly chip makers. For now, the biggest challenge for the business is to get China's approval, said CLSA's managing director Sebastian Hou. For the Chinese government, she wants to avoid the nightmare of a US company taking over Arm. Because that would pave the way for US government intervention to restrict Beijing's access to technology. Currently, Arm designing chips is the smart device center as it licenses its chip designs to technology companies around the world. Most chip companies rely on Arm, which is well positioned in the market, and, being part of Nvidia, most manufacturers find themselves in a dilemma over which strategic decisions they should make. However, the proposed $ 40 billion acquisition agreement is subject to regulatory approval in the UK, US, EU and China. Although Arm is headquartered in the UK and Nvidia in the US, the company has offices in China, the EU and other locations. Although manufacturers have concerns about how the business will change the chip landscape, Nvidia has promised to maintain the "open licensing model and customer neutrality" that Arm was pursuing. Currently, almost all smartphones available today use Arm's technology. The chip designer has shipped over 180 billion chips worldwide that run on his processor cores and other components. It is important to note that Chinese investors hold a majority stake in Arm's Chinese operations. According to Softbank, the company accounted for around 20% of its revenue in the fiscal year that ended in March 2018. Nvidia CEO Jensen Huang said he was optimistic that Chinese regulators will approve the deal. Recently, the Global Times, following the thinking of the Chinese government, reported that if a US company acquires arm, it will put Chinese tech giants at a disadvantage.