NVIDIA, could the UK block the acquisition of ARM?
NVIDIA
When NVIDIA announced its plans to acquire British semiconductor designer ARM Ltd., the deal sparked concern from several regulators around the world. According to an article published by Bloomberg, it appears that the operation could potentially be blocked by the UK government.In October 2020, NVIDIA announced that it had entered into an agreement with Softbank to acquire the main supplier of the UK semiconductor projects, ARM Ltd., for the staggering $ 40 billion. Softbank is expected to remain a shareholder of ARM for a total of less than 10% of the company NVIDIA is seeking to acquire. However, the importance of the agreement has attracted the attention of many regulatory bodies around the world. Perhaps the biggest potential threat lies in the UK government's effort to look for any national security issues that may arise.
We previously told you that the European Commission could slow down the operation. , as NVIDIA will have to submit all documents by September this year. At best, the documents will be processed in six months, which means that the deal could get approval by March 2022. According to the latest report, the UK government has conducted an investigation into the deal and expressed its approval. his evaluation in late July, just a few days ago. In the documents, the government confirms the presence of national security issues that could prevent the approval of the operation.
As the investigation is still ongoing, no one has made a final decision and NVIDIA is constantly working with regulators to resolve any concerns that may arise.
An NVIDIA spokesperson said:
We continue to work with the UK government to follow the regulatory process. We look forward to their questions and look forward to resolving any issues they may have.
As the Californian company believes the deal should go through smoothly and seeing as the company is ready to work with the government, this should provide some security to investors hoping to see NVIDIA finalize the merger.
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Why Nvidia’s $40 billion bid for Arm could be in jeopardy
© Provided by CNBC Jensen Huang, president and CEO of Nvidia, speaks during the Computex Show in Taipei on May 30, 2017.LONDON — Nvidia's $40 billion bid to buy U.K.-based chip designer Arm from Japan's SoftBank has started to look increasingly uncertain.
The deal, one of the biggest semiconductor takeovers ever, was announced in September to much fanfare, although competition regulators around the world soon announced plans to investigate the acquisition. Probes were launched in the U.S., the U.K., China and Europe after companies like Qualcomm, Microsoft, Google and Huawei complained that the deal was bad for the semiconductor industry.
The U.K. investigation, being led by the Competition and Markets Authority, is also taking national security concerns into account. The CMA submitted its initial report to U.K. Culture Secretary Oliver Dowden on July 20, and he will take the decision on national security.
The report contains worrying implications for national security, and the U.K. is currently inclined to reject the takeover, according to a report from Bloomberg on Tuesday, citing an unnamed source familiar with the matter. A separate unnamed source said the U.K. was likely to conduct a deeper review into the merger as a result of national security concerns, Bloomberg reported. CNBC was unable to independently verify the report.
It's unclear how U.K. national security would be affected if Arm goes from being Japanese-owned to U.S.- owned, but governments have come to view semiconductor technology as a vital asset amid the global chip shortage.
An Nvidia spokesperson told CNBC: 'We continue to work through the regulatory process with the U.K. government. We look forward to their questions and expect to resolve any issues they may have.' Arm and the U.K. government did not respond to CNBC's request for comment.
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The deal, which was initially expected to close by March 2022, also risks being held up elsewhere. In June, Chinese antitrust lawyers reportedly told The Financial Times that China's investigation could take the deal beyond the 18-month window given by Nvidia in September 2020.
European regulators are thought to be reluctant to consider the case until after the summer holidays, according to a Reuters report published in June that cites people familiar with the matter, who say this could make it difficult for Nvidia to close the deal by March.
The purchase agreement gives the two companies the option to extend the deadline to September 2022. But, at that point, either company can walk away if the deal does not receive government approval.
What is Arm?Cambridge-based Arm sells its semiconductor blueprints and licenses to chip manufacturers around the world; it is viewed as a 'neutral player' and is sometimes referred to as the 'Switzerland of the chip industry.'
Some of these manufacturers, which compete with Nvidia, are concerned that the Santa Clara, California-based chip giant could make it harder for them to access Arm's technology.
Nvidia has repeatedly insisted that it won't change Arm's business model and that it will invest heavily in the company to help it meet increasing demand.
Nvidia's share price does not seem to have been affected following the Bloomberg report. It closed at $198.15 on Tuesday, up almost 1% for the day.
Elsewhere, another semiconductor acquisition is also being scrutinized. U.K. Prime Minister Boris Johnson has ordered national security adviser Stephen Lovegrove to review the takeover of Newport Wafer Fab, the U.K.'s largest semiconductor wafer manufacturing facility. The company is being acquired by Chinese-owned Nexperia for £63 million ($88 million).
Correction: An earlier version had the wrong last name for Stephen Lovegrove.
