Nvidia’s $ 40 billion bid on Arm could be at risk

Nvidia President and CEO Jensen Huang will speak at the Computex Show in Taipei on May 30, 2017.

SAM YEH | AFP | Getty Images

London- Nvidia The $ 40 billion bid to buy a UK-based chip designer Arm from Softbank in Japan has begun to look more and more uncertain in recent weeks.

One of the biggest semiconductor acquisitions ever seen, the deal Announced last September Competition regulators around the world have announced plans to investigate acquisitions soon, but to many fanfares. The probe was launched in the United States, United Kingdom, China and Europe after companies such as Qualcomm, Microsoft, Google and Huawei complained that it was a bad deal for the semiconductor industry.

A UK study led by the Competitive Markets Authority also considers national security concerns. The CMA submitted its first report to the Secretary of Culture of the United Kingdom, Oliver Dauden, on 20 July.

According to the report, the assessment included national security concerns and the UK is currently apt to refuse acquisitions. Report from Bloomberg On Tuesday, I quoted an unnamed source familiar with the matter. Another unnamed source said Britain was likely to undertake a deeper review of the merger as a result of national security concerns, Bloomberg reported. CNBC was unable to validate the report on its own.

It is unclear how the UK’s national security will be affected if Arm moves from Japanese to US ownership, but the government has come to see semiconductor technology as an important asset. Global tip shortage..

A spokesperson for Nvidia told CNBC: “We are continuing the regulatory process with the UK Government. We look forward to their questions and look forward to resolving any issues.” Arm and the UK Government requested CNBC’s comment. Did not respond immediately.

The transaction, which was originally expected to close by March 2022, risks being put on hold elsewhere.China’s antitrust lawyer reportedly announced in June Told the Financial Times A Chinese study could trade beyond the 18-month window given by Nvidia in September 2020.

Meanwhile, European regulators are believed to be hesitant to consider the case until the end of the summer vacation. Reuters report Published in June, citing people familiar with the issue, it states that this could make it difficult for Nvidia to close a deal by March next year.

The purchase agreement gives both companies the option to extend the deadline until September 2022. However, at that point, either company can leave if the transaction is not approved by the government.

What is an arm?

Based in Cambridge, Arm sells chip blueprints and licenses to chip makers around the world. It is considered a “neutral player” and is sometimes referred to as the “Switzerland of the chip industry”.

Some of these manufacturers competing with Nvidia are concerned that Santa Clara-based chip giants could have difficulty accessing Arm’s technology.

Nvidia has repeatedly insisted on investing heavily in Arm to meet growing demand without changing Arm’s business model.

Following Bloomberg’s report, Nvidia’s share price does not appear to be affected. The closing price on Tuesday was $ 198.15, up almost 1% that day.

Elsewhere, another semiconductor acquisition is also being scrutinized. UK Prime Minister Boris Johnson has ordered National Security Adviser Stephen Longgrove to consider acquiring Newport Wafer Fab, Britain’s largest semiconductor wafer manufacturing facility. The company has been acquired by China-owned Nexperia for £ 63 million ($ 88 million).

Nvidia’s $ 40 billion bid on Arm could be at risk

Source link Nvidia’s $ 40 billion bid on Arm could be at risk

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