Nvidia asks Chinese regulators to approve $40bn Arm deal
Nvidia has submitted an application to Chinese competition regulators to review a $40bn takeover of UK chip designer Arm, according to people familiar with the matter, roughly eight months after it announced the deal.
The application, which the people said was made in recent weeks, sets in motion a period of scrutiny that could take between a year and 18 months, according to Chinese antitrust lawyers.
That would exceed the 18-month timeline set out by Nvidia when it unveiled the deal last September.
China is a huge market for Arm, which licenses its energy-efficient chip designs through a local joint venture. Its sales in the country, which two people familiar with the venture put at roughly $500m in 2019, give Chinese regulators the right to review the acquisition.
Jensen Huang, Nvidia’s chief executive, said in an interview with the Financial Times last month that the US chip company had “started the process” of engaging with Chinese regulators. He said he was confident the deal would be cleared within the timeframe set by Nvidia.
He referred to Nvidia’s purchase of Israeli company Mellanox, which was announced in 2019, in which Chinese regulatory approval was the last step in a 13-month process. “China usually comes after all the other regulators . . . This is consistent with the last experience I had,” he said.
Nvidia added that the “regulatory process is confidential and we are not able to comment on its progress”.
Several people familiar with the thinking of China’s antitrust regulators said the country’s chipmakers, such as Huawei’s HiSilicon and Semiconductor Manufacturing International Corporation, as well as state-backed chip investment group E-Town Capital had opposed the deal.
Their concerns stemmed from fears of handing greater control of the designs that underpinned a large portion of China’s chip industry to US-based Nvidia.
But Huang said a union between Arm and Nvidia would “only bring more innovation to the marketplace” and that he remained confident the deal would close.
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.
Wu remains in legal control of the business and negotiations for his exit have yet to produce results.
Wu brought proceedings against Arm China last summer in the southern city of Shenzhen, where the joint venture is registered and where he has backing from some members of the local government, according to several people familiar with the situation.
The lawsuit, filed by two Arm China shareholders under Wu’s control, alleged that the board’s decision to remove him was invalid. Wu has been permitted to represent both Arm China and the two shareholders in the case, making him both plaintiff and defendant.
“He is basically suing himself,” said one person close to the matter. “One of his law firms can argue that the decision to remove him was invalid and the other law firm can agree.”
The Shenzhen court has yet to hold an official hearing for the case. People close to Arm China’s board are hopeful the judges may eventually install its representative as the defendant, but they have so far been unsuccessful.
Wu and Arm China did not respond to a request for comment.
Additional reporting by Qianer Liu in Shenzhen