Chinese regulators may block Nvidia’s $40b Arm buyout: analysts

By Zhang Hongpei Source: Global Times Published: 2020/9/14 21:33:40

Chinese regulators may block Nvidia’s $40b Arm buyout

chip Photo:VCG

US semiconductor maker Nvidia said it will acquire UK-based computer chip designer Arm Holdings from SoftBank Group in a transaction worth $40 billion, a deal that could put the Chinese semiconductor industry at the risk of US control, Chinese analysts said.

The acquisition is likely to encounter roadblocks from China's regulators, they added.

The Nvidia-Arm merge brings together Nvidia's leading artificial intelligence (AI) computing platform with Arm's vast ecosystem to create a colossal computing company, helping Nvidia expanding into large, high-growth markets. SoftBank is expected to keep about 10 percent of Arm's stakes.

Arm, which was acquired by SoftBank in 2016, is seen as an independent entity that gives equal treatment to all licensees, with its major customers including Apple, Samsung, Qualcomm and Huawei.

"As part of Nvidia, Arm will continue to operate its open-licensing model while maintaining the global customer neutrality that has been foundational to its success," the US firm said in a statement.

However, the "neutrality" is in serious doubt as Arm will become part of a US firm, which means the Trump administration could contain China's growing chipset industry from the design side, following its crackdown on Huawei, Ma Jihua, a veteran telecom industry analyst, told the Global Times on Monday.

"The acquisition will affect the development path of China's chipset industry as most of its products are based on Arm architecture," said Ma.

Huawei's Kunpeng, Kirin and Ascend chips are all based on Arm architecture. "If the US prohibits Arm from cooperating with Huawei, the design of Huawei chips will be temporarily suspended," said Huang Haifeng, an independent semiconductor industry observer.

But the deal is likely to prompt close scrutiny by antitrust authorities around the world, including those in the US, UK, EU and China, and whether the deal goes through hinges on the regulators' reviews.

Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, told the Global Times on Monday that the Chinese government is likely to play a role in reviewing the case and the chance of its approval is low. 

"Regardless of whether the US government stands behind the purchase, its impact on China's semiconductor industry is not something we want to see in the future," said Xiang.

The ripple effect of the acquisition will prompt Chinese firms to seek alternative solutions, analysts said.

"If Huawei's chip design is banned, it will find a new design platform instead, such as using the open RISC-V instruction set architecture," as could other Chinese companies, Huang noted.

Intel's X86 and Arm are the two major players in the central processing unit (CPU) market. Compared with the big-name X86, Arm represents current trends as it is the CPU architecture used in mobile products like smartphones. RISC-V has matured quickly in China in recent years, and the open source silicon development ecosystem is improving.

Newspaper headline: Chinese regulators may block Nvidia’s $40b Arm buyout

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