TECH NEWS – Nvidia, the US chipmaker acknowledges delay due to global regulatory scrutiny but remains confident of approval.
A year ago, Nvidia managed to close a historic acquisition agreement with SoftBank to acquire ARM. The British chip design company would become part of Nvidia as one of its divisions in an astronomical $ 40 billion deal. Although SoftBank would continue to maintain its headquarters and operate with the different companies in the market with the freedom it does today, the agreement raised many alarms.
One of the first stumbling blocks came from China, slowing down buying through the country’s antitrust agencies as much as possible. Typically, the time taken by these agencies to conduct their review is about six months; however, almost a year after the announcement of the purchase, they had not even started the process. To this must be added that the magnitude of the operation may lead to the revision to be lengthened up to more than double the usual amount.
It seems that both the Chinese manufacturers Huawei and ZTE would be pushing to hinder the purchase since they would be directly affected by the Nvidia agreement. On the other hand, Qualcomm would also be pressing to prevent the deal from taking place and thus have the opportunity to access a stake in ARM. All these difficulties were only the beginning, and Jensen Huang, CEO of Nvidia, was evident when he launched the agreement; he knew that it would shake the hornet’s nest, but he was confident that he could get around all the obstacles.
In an interview with The Financial Times, Jensen Huang acknowledged that negotiations with regulators took longer than he thought. However, he is confident that they will see the benefits of the acquisition. Opposition to the purchase is growing more robust, and Nvidia is approaching a stalemate, with a takeover deal expiring in a month, contract extensions running through the end of 2022. If the agreement has not been reached by then, everything could be ruined.
Several fronts are presented against the purchase of ARM. On the part of the United Kingdom, regulators focus their doubts on security issues. At the same time, politicians have denounced that the investment represents a severe blow to the national technology industry and its sovereignty at a global level. In the United States, the Federal Trade Commission is also investigating the purchase after protests from Qualcomm, Google and Microsoft, which argue about the limitation that it would imply in terms of free competition.
In China, the control of this market is an essential weight in the geopolitical battle with the United States, and ARM is perceived as a neutral company in the importance of the global powers of the industry. Conflicts continue to grow in Nvidia’s ambitious business operation while trying to resolve the component shortage issues it is expected to face throughout 2022.
Source: Financial Times